5 techniques for digital nudges

A slight push is all you need

The concept of ‘nudge,’ i.e. to make people change behaviour by making a small change in their choice architecture has taken the world by storm. In this short piece, I provide some techniques and examples based on research on how different principles can be used to develop digital nudges:

Framing
Framing refers to a controlled presentation of a decision problem considering different framing methods regarding one decision problem.

Usage: A great example is observed on Amazon.com. On the product pages, Amazon emphasises product-related items. In doing so, the choice architecture is intervened by pulling the attention of the user to related articles. This stress may trigger an additional purchase, which was initially not planned by the user.

Status Quo Bias
Status quo bias implies that we prefer things as it is. This occurs because we feel the disutility of giving up an object is higher than the utility associated with acquiring it.

Usage: The car configurator on the Tesla website is a practical application. Here a nudge in the form of default settings is implemented. When configuring a model, certain packages and options are chosen by default. Similar procedure is also applied for software products (e.g., pre-selected installation options)

Social Norms
Individuals tend to orient towards the behaviour of others, searching for social proof when unable to determine the appropriate mode of behaviour in a given situation.

Usage: Amazon’s product recommendation systems exhibits social proof. On the page of a specific product, a recommendation for further products is given, based on what items were bought by other customers (“Customers Who Bought This Item Also Bought”).

Loss Aversion
The psychological principle of loss aversion assumes that losses and disadvantages have a greater impact on preferences than gains and advantages.

Usage: Booking.com can be found on the result page of an applied search for a hotel. There, statements such as “Booked 36 times today”, “-45% TODAY!”, “8 people are looking right now”. By giving information about the popularity or limitation, these statements may shorten the purchase decision.

Anchoring
When individuals lack information, they tend to assess or estimate it by using an individual starting point. Consequently, different starting points result in different estimates biased toward the considered starting values.

Usage: For example, the European Energy Label provides information about the energy class and water consumption as well as energy consumption. Apple, for example, offers the iPhone 6s Plus in three capacity options with different prices. The possibilities are displayed at the same moment, while the lowest and the highest price options serve as anchors. This may lead the user to assess the median choice relative to the given reference points (prices) influencing her price perception.

References:

Bertsimas, D., O’Hair, A.: Learning Preferences under Noise and Loss Aversion: An Optimization Approach. Operations Research, 61, 1190–1199 (2013)

Mirsch, T.; Lehrer, C.; Jung, R. (2017): Digital Nudging: Altering User Behavior in Digital Environments,in Leimeister, J.M.; Brenner, W. (Hrsg.): Proceedings der 13. Internationalen TagungWirtschaftsinformatik (WI 2017), St. Gallen, S. 634-648

Kahneman, D., Knetsch, J.L., Thaler, R.H.: Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias. The J. of Economic Perspectives, 5, 193–206 (1991)

 

Thanks for the picture robbiematthews1.t21

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