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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

Hendrik Bruns

University of Hamburg - School of Business, Economics and Social Sciences; Max Planck Society for the Advancement of the Sciences - International Max Planck Research School on Earth System Modelling

Elena Kantorowicz-Reznichenko

Erasmus University Rotterdam

Katharina Klement

University of Jena

Marijane Luistro Jonsson

Stockholm School of Economics

Bilel Rahali

University of Grenoble

Date Written: October 27, 2016

Abstract

‘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

Bruns, Hendrik and Kantorowicz-Reznichenko, Elena and Klement, Katharina and Luistro Jonsson, Marijane and Rahali, Bilel, Can Nudges Be Transparent and Yet Effective? (October 27, 2016). WiSo-HH Working Paper Series Working Paper No. 33. Available at SSRN: https://ssrn.com/abstract=2816227

Hendrik Bruns (Contact Author)

University of Hamburg - School of Business, Economics and Social Sciences ( email )

Welckerstrasse 8
Hamburg, D-20354
Germany

Max Planck Society for the Advancement of the Sciences - International Max Planck Research School on Earth System Modelling ( email )

Bundesstr. 53
Hamburg, 20146
Germany

Elena Kantorowicz-Reznichenko

Erasmus University Rotterdam ( email )

Zuid-Holland
Netherlands

Katharina Klement

University of Jena ( email )

Furstengraben 1
Jena, Thuringa 07743
Germany

Marijane Luistro Jonsson

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Bilel Rahali

University of Grenoble ( email )

271 Rue de la Houille Blanche
Bâtiment les Taillées
Grenoble, 38400
France

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