Have you ever wondered what do "small plates" have to do with your irrational economic decision-making and cognitive dissonance?
You see, two behavioral economists Richard Thaler and Cass Sunstein gave the world the concept of Nudge theory. What is it? Have you ever been influenced by it? Or are you immune from its application? The core concept of Nudge Theory is that small changes in the presentation of choices can influence people's (your's and mine) decisions. It operates on the idea that humans are predictably irrational, often making choices that may not align with their best interests due to cognitive biases or environmental factors.
Think of it this way: small plates means small portions means fewer calories means feeling fuller with fewer bites and so on. People know smaller portions are good for them. Yet, sometimes, extraneous nudges help the irrational mind so we rely on "crutches". For example, think dips placed next to chips at the grocery aisle. Think of the maze of ropes at the airport check-in to prevent chaos at the counter. Think of a fly painted at the men's urinal to reduce cleaning expenses. Think double lines painted on a single lane road to keep you on the rational side of safety. Think cross walks. Best of all, think tax deferred 401Ks as incentives against procrastination. You get the point. All of these examples are based on the efficacy of nudge theory.
Nudge Theory is a concept in behavioral science, political theory, and economics which proposes that positive reinforcement and indirect suggestions can influence your behavior and decision-making. This theory was popularized in the book "Nudge: Improving Decisions About Health, Wealth, and Happiness" by Richard Thaler and Cass Sunstein. The theory is based on the premise that people (you and I) often make decisions that are not in our best interest due to lack of information, short-term orientation, and cognitive biases. By gently guiding or 'nudging' you towards more beneficial choices, it's possible to achieve better results in various contexts such as health, finance, and environment. It has been used in public policy to encourage healthier eating, increase saving rates, and promote eco-friendly behaviors.
At its core, nudge theory suggests that rather than imposing mandates or restrictions, policymakers and organizations can design "nudges" that subtly steer individuals towards better decisions. These nudges are typically inexpensive, easy to implement, and non-coercive, aiming to maintain individuals' freedom of choice while gently nudging them towards more beneficial outcomes. Nudges can take various forms, such as changing default options, providing clear information, or employing social norms to influence behavior. For example, placing healthy food options at eye level in a cafeteria can encourage healthier eating habits.
Think about it!