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TEMPTED TO DO THE RIGHT THING
Virtually all university students know about the pains of procrastinating.
Why start with the assignment right now instead of in a couple of
minutes? Nonetheless, we do it all the time and get ourselves in considerable
trouble most of the time. Suddenly, time is short and deadlines approach
sooner than we anticipated. Sounds familiar?
There is help to make the right decision. One solution is to pledge to
deliver your next paper on time. If you fail, you will donate a significant sum to
charity. In this scenario, the short-term incentives to keep delaying are
contrasted with the somewhat clearer long-term consequences of loosing
money. The question remains—why do we fail to make the right choice so
often, and how can we improve?
The problem lies in human nature. We are good in long-term planning, but
carrying out our decisions seems awfully complicated. Humans are good
“planners”, but bad “doers”, to use two terms coined by economist Richard
H. Thaler and law professor Cass R. Sunstein. The two have published
“Nudge – Improving Decisions about Health, Wealth, and Happiness” last
year, in which they deal extensively with how to turn us into better “doers”.
Predictably Irrational
The authors are both of the University of Chicago and were both informal
advisors to Barack Obama’s presidential campaign. Thaler and Sunstein
have both worked on the intersection of rational economic decision-making
and the predictable irrational behavior of most humans when it comes to
economic decisions. The intellectual background of the book is formed by
behavioral economics, a subfield of economics that integrates the systemic
biases of human action into traditional economic models.
The basic premise is that since people don’t seem to think very hard about
the choices they make, policy makers should use their knowledge of the
systemic biases to “nudge” people into making better decisions. A nudge is
any device “that alters people’s behavior in a predictable way without
forbidding any options or significantly changing their economic incentives,”
the authors write.
A “nudge” can take many forms. If you put fruits and salads in the
beginning of the cafeteria line, you “nudge” students to eat healthier, since
the way choices are arrayed to them influence their decisions. Thaler and
Sunstein call the setting in which people make decisions “choice
architecture”. Since there is no neutral way to arrange the foods, “choice
architects” like cafeteria managers influence people in any case—so why not
help the hungry students to improve their decisions about chips or Caesar
salad?
Another “nudge” are default options. A lot of patients die each year,
because there are not enough organs for transplant available. How can more
people be persuaded to commit to donate their organs after their death?
They could either be asked to tick a box opting into donation or opting in
might be the default setting and they have to actively opt out. The difference?
One study found that with an opt in policy, 42% of people agree to donate,
whereas with an opt out policy, 82% committed to donate. They were
“nudged” to follow the default.
Want more Soup?
The examples for the influence of choice settings go on and on—
sometimes to the point of absurdity. One study showed that how much you
eat depends on the size of the plate you eat it from. In the experiment, test
persons were asked to eat as much as they liked from a bowl of tomato
soup, while the soup was secretly refilled from below the entire time. Some
people continued to eat until the scientists stopped the experiment.
Politically, Thaler and Sunstein’s ideas are in hot demand. Their book is
popular both in circles around Tory leader James Cameron, as well as with the Obama crowd. In fact, Cass Sunstein has just been named to lead the White House Office of Information and Regulatory Affairs—reason enough to
turn attention to the policy recommendations of the book
 

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