Can Nudges Be Transparent and Yet Effective?
WiSo-HH Working Paper Series Working Paper No. 33
39 Pages Posted: 1 Aug 2016 Last revised: 19 Nov 2016
Date Written: October 27, 2016
‘Nudges’ receive growing attention as an effective strategy to alter people's decisions without significantly changing economic incentives or limiting options. However, being often very subtle and covert, nudges are also criticized as unethical. By not being transparent about the intention to influence individual choice they might be perceived as limiting freedom of autonomous actions and decisions. So far, empirical research on this issue is scarce. In this study, we investigate whether nudges can be made transparent without limiting their effectiveness. For this purpose, we conduct a laboratory experiment where we ‘nudge’ contributions to carbon emission reduction by introducing a default value. We test how different types of transparency (i.e. knowledge of the potential influence of the default, its purpose, or both) influence the effect of the default. Our findings demonstrate that the default increases contributions, and information on the potential influence combined with the purpose of the default, or just its purpose, do not significantly affect contributions. Findings are somewhat inconclusive with respect to information on the potential behavioral influence. Furthermore, we do not find evidence that psychological reactance interrelates with the influence of transparency. Generally, our findings support the policy-relevant claim that nudges (in the form of defaults) can be transparent and yet effective.
Keywords: Nudging, Transparency, Carbon reduction, Experiment, Defaults, Psychological reactance
JEL Classification: D03, H41, Q58, K23
Suggested Citation: Suggested Citation