A Review of Nudges: Definitions, Justifications, Effectiveness
Forthcoming in Journal of Economic Surveys
33 Pages Posted: 30 Nov 2020 Last revised: 21 Jun 2021
Date Written: June 16, 2021
In 2008, the behavioral economist Richard Thaler and the legal scholar Cass Sunstein published a book in which they advocated a novel approach to public policy based on the notion of a ‘nudge’. Roughly speaking, a nudge is an intervention in the decisional context that steers people’s decisions by acting on their cognitive biases. The notion of a nudge generated an intense debate across different disciplines and proved popular with many policy makers around the world. The present paper reviews the debate and research on nudges by focusing on three main dimensions: (1) the exact definition of nudges; (2) the justification of nudge policies, with a focus on ‘libertarian paternalism’; and (3) the effectiveness of nudges, both over time and in comparison with standard policies.
Keywords: Nudge, Behavioral welfare economics, Bounded rationality, Libertarian paternalism, Boosts
JEL Classification: D01, D04, D90, G40, M31
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