Why Nudges Coerce: Experimental Evidence on the Architecture of Regulation

Abstract

Critics frequently argue that nudges are more covert, less transparent, and more difficult to monitor than traditional regulatory tools. Edward Glaeser, for example, argues that “[p]ublic monitoring of soft paternalism is much more difficult than public monitoring of hard paternalism.” As one of the leading proponents of soft paternalism, Cass Sunstein, acknowledges, while “[m]andates and commands are highly visible,” soft paternalism, “and some nudges in particular[,] may be invisible.” In response to this challenge, proponents of nudging argue that invisibility for any given individual in a particular choice environment is compatible with “careful public scrutiny” of the nudge. This paper offers first of its kind experimental evidence that tests whether nudges are, in fact, compatible with careful public scrutiny. Using two sets of experiments, the paper argues that, even when made visible, nudges attract less scrutiny than their “hard law” counterparts.

Keywords: nudge, regulation, legal theory, behavioral economics