How Nudge Strategies Can Backfire in Social Interactions

50 Pages Posted: 31 Aug 2016 Last revised: 19 Feb 2017

David P. Daniels

Stanford Graduate School of Business

Julian J. Zlatev

Stanford Graduate School of Business

Date Written: February 18, 2017

Abstract

Biases influence important decisions, but little is empirically known about how individuals try to exploit others’ biases in strategic interactions. For instance, people must often decide between giving others choice sets with positive or certain options (influencing them toward safer options) versus negative or risky options (influencing them toward riskier options). We show that individuals’ nudge strategies – decisions about how to exploit others’ biases – are distorted toward presenting choice sets with positive or certain options, across eleven experiments involving diverse samples (executives, law/business/medical students, adults) and contexts (public policy, business, medicine). These distortions primarily reflect decision biases (loss aversion for choice sets and a certainty effect for choice sets) rather than social preferences, and they can cause majorities to use nudge strategies that backfire. Surprisingly, people’s predictions about the directional effects of nudges are generally correct. Thus, prompting people to consider their predictions can improve suboptimal nudge strategies.

Keywords: nudges; strategic decision making; social influence; choice architects; choice architecture; loss aversion; reflection effect; certainty effect

Suggested Citation

Daniels, David P. and Zlatev, Julian J., How Nudge Strategies Can Backfire in Social Interactions (February 18, 2017). Available at SSRN: https://ssrn.com/abstract=2832703

David P. Daniels (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305
United States

Julian J. Zlatev

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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