The Critical and Problematic Role of Bounded Rationality in Nudging

Document Type

Book Chapter

Publication Date

2016

Publication Information

in Nudging - Possibilities, Limitations and Applications in European Law and Economics 3 (Klaus Mathis & Avishalom Tor eds., 2016).
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Available in Kresge Law Library
K487.E3 N83 2016

Abstract

From the Publisher
Chapter 1
Nudging has become an increasingly popular policy tool on both sides of the Atlantic, even while scholars and commentators continue to debate its appropriate boundaries, efficacy, and legitimacy. The present chapter outlines a sympathetic, ‘internal’ critique of Nudge’s policy framework (Thaler and Sunstein 2008. Nudge: Improving decisions about health, wealth, and happiness. New Haven: Yale University Press) identifying a fundamental problem that has received little attention to date. Thaler and Sunstein define their key concept as the use of a particular toolkit (rationally-neutral behavioural interventions) to promote a specific policy goal (individuals’ self-judged well-being). To remain within the boundaries of these defining parameters, the chosen toolkit must nudge only by helping boundedly rational people better achieve their own ends. However, a closer look at this intuitively appealing approach reveals a fundamental problem of fit that should trouble even those who support Nudge’s mission. Namely, while the tools of nudging can sometimes promote its declared goals, other tools can often do so equally well or even more effectively. And the tools of nudging are equally suited to promoting goals that are excluded by Nudge’s framework. This problem of fit causes some of Thaler and Sunstein’s applications to breach the boundaries of what they define as legitimate nudges and, more significantly, obscures the broader potential of behaviorally informed policies and the substantial trade-offs involved in their implementation.

Series: Economic Analysis of Law in European Legal Scholarship, vol. 3

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