Abstract
Nudge theory defines a nudge as a cheap, non‑coercive prompt that predictably steers behaviour while preserving all options. The book’s first part outlines techniques; the second part applies them to U.S. policy challenges under the ethic of libertarian paternalism.
Context
In Nudge: Improving Decisions About Health, Wealth, and Happiness (2008), the authors define nudging as:
"...A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not..."
In Thaler and Sunstein's book 'Nudge', the first 100 or so pages explain how people think about choices and make decisions. These 100 pages are the most significant section of the book in explaining why and how nudge theory works in a general sense. The second half of the book explores the application of nudge theory in relation to major challenges of USA behavioural economics (notably savings and investments, credit markets, and social security) and to USA society (notably prescription drugs, organ donation, the environment and carbon tax, and marriage).
Abraham Maslow
Maslow's hierarchy of needs was presented in his 1943 paper A Theory of Human Motivation. It is a conceptualisation of the needs (or goals) that motivate human behaviour.
Maslow’s hierarchy of needs offers a useful lens for understanding why nudges work and how they should be designed. By organising human motivation into levels, physiological, safety, belonging, esteem, and self-actualization, Maslow highlights that people respond first to interventions addressing immediate, concrete needs. Nudges that reduce friction or make essential choices easier (for example, simplifying enrollment in food assistance or defaulting employees into health insurance) are effective because they operate at the lower, more urgent levels of the hierarchy where behaviour is most strongly driven by immediate survival and security concerns.
At the same time, Maslow’s emphasis on social and esteem needs helps explain the success of nudges that leverage social norms, identity, and recognition. Messages that show most neighbours conserve energy or that peers have paid their taxes tap into belonging and esteem. People act to maintain their social standing and group membership. Designing nudges with these psychological drives in mind makes them more persuasive without removing freedom of choice, aligning with the humanistic impulse to support people’s growth while preserving autonomy.
Maslow’s humanistic ethics also shapes normative thinking about when and how nudges should be used. His focus on dignity, personal growth, and self-actualisation suggests nudges ought to empower individuals rather than manipulate them, supporting long-term flourishing instead of exploiting short-term biases. This perspective reinforces the ethical stance of “libertarian paternalism”: steer choices toward welfare-enhancing options while keeping alternatives available.
Maslow’s framework highlights limits and cautions for nudge policy. If basic needs are unmet, such as poverty, food insecurity, housing and instability, subtle choice architecture is unlikely to produce sustained change. Structural interventions are needed first. Thus, Maslow encourages policymakers to combine nudges with broader social supports and to tailor interventions to where target populations sit in the hierarchy, ensuring nudges are appropriate to people’s lived circumstances and promote genuine well-being.
Prospect theory
Kahneman and Tversky's paper 'Prospect theory' (1979) became regarded as a fundamentally important contribution to the understanding of human thinking and decision-making, notably in behavioural economics. 'Prospect Theory', along with other heuristic work of Kahneman and Tversky, formed a substantial part of the development of the Thaler-Sunstein nudge theory.
Based on results from controlled studies, Prospect Theory describes how individuals assess their loss and gain perspectives in an asymmetric manner. For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe people's actual behaviour.
McGregor's XY Theory
Douglas McGregor, a student of Abraham Maslow, was an American social psychologist, who proposed his X-Y theory in his 1960 book 'The Human Side Of Enterprise'. McGregor’s theory X and theory Y shape managers’ assumptions and therefore the kinds of nudges they design. Theory X sees workers as needing control, so it leads to nudges that enforce compliance (restrictive defaults, penalties, frequent reminders, monitoring). Theory Y sees workers as self-motivated, so it leads to nudges that support autonomy (opt-out defaults, clear information, social norms, and commitment devices).
Theory X nudges get quick compliance but risk undermining intrinsic motivation, creativity, and long-term engagement. Theory Y nudges build sustained motivation and innovation but may deliver slower short-term results and require a supportive culture and capabilities. Ethically, theory X can justify coercive or opaque nudges, while Theory Y favours transparency and consent.
Clean Language
Clean Language, developed by David Grove in the 1980s, uses neutral, non‑leading questions and the client’s own words to explore thoughts and metaphors. When paired with nudging, it changes both ethical profile and effectiveness.
Because it avoids inserting the questioner’s assumptions, Clean Language preserves perceived autonomy and reduces covert manipulation, which is important for ethical nudges. It also reveals users’ frames and metaphors, letting designers craft nudges that align with those frames and increase acceptance.
Neutral phrasing lowers defensive resistance, and so Clean Language nudges trigger less resistance. The method provides qualitative anchors (phrases, images, metaphors). However, genuine Clean Language interviews are time‑consuming since turning metaphors into actionable nudge features requires careful coding and validation. Ethics remain crucial through the use of opt‑outs and clear goals.
Neuro-linguistic programming
NLP was created in the early 1970s by Richard Bandler, a computer scientist and Gestalt therapist, and Dr John Grinder, a linguist and therapist. Bandler and Grinder invented a process known as 'modelling' that enabled them to study three of the world's greatest therapists and consciously apply their techniques.
Neuro‑linguistic programming (NLP) makes nudges more effective by shaping how messages are said. Simple techniques like framing and presuppositions steer expectations; phrases such as “When you try this, you’ll notice…” assume the behaviour and reduce resistance, while framing outcomes as gains or losses changes motivation. Matching wording to sensory styles (visual, auditory, kinaesthetic) and using vivid, multisensory language also makes messages more engaging and memorable, so the nudge feels more relevant.
NLP’s tools for influence, such as anchors, embedded commands, pattern interrupts, and mirroring, help draw attention and prompt action. Anchors (consistent cues) shift perceived value, embedded short commands within sentences emphasise the call to action and pattern interrupts break automatic dismissal. Mirroring an audience’s language builds rapport and trust, increasing acceptance. Together with simple storytelling and future‑pacing (having people imagine benefits), these techniques make the desired behaviour easier to picture and choose.
Transactional Analysis
Transactional Analysis (TA) helps nudge design by showing how people communicate through three “ego states”: Adult (calm, logical), Parent (authoritative or caring), and Child (emotional or playful). Framing messages in the adult voice through clear facts and options works best for serious or complex choices. Nurturing parent tones (protective reminders) can encourage safety behaviours, while child‑friendly, playful nudges work for low‑risk, habit or reward tasks.
TA also shows that positive recognition (“strokes”) boosts compliance, but shaming or moralising (Critical Parent) backfires. If a nudge triggers defensiveness, switch to adult‑to‑adult wording to de‑escalate.
Psychological Contract
Descriptions and definitions of the psychological contract first emerged in the 1960s, notably in the work of organisational and behavioural theorists Chris Argyris and Edgar Schein.
The psychological contract, which is people’s unspoken expectations about fairness and reciprocity, shapes how nudges land. When users believe an organisation respects them and keeps promises, nudges feel like helpful guidance. When users sense deception, hidden costs, or constant nagging, nudges breed distrust and resistance.
The authors design nudges to honour that contract by briefly explaining: why the nudge exists and how it benefits the user, keeping requests small and reasonable, offering clear opt-outs, and following through consistently. Use nudges sparingly and monitor response (reactions, complaints, opt-outs). Good reception with few complaints means the contract holds, while rising opt-outs or negative feedback indicate a breach. Prioritising transparency and user welfare helps nudge support cooperation rather than erode trust.
Cybernetics
Cybernetics studies how systems control themselves and communicate, using ideas like feedback and adaptation. For nudging, this means designers can monitor behaviour (sensors, data) and provide timely responses, like an app that shows your step count and adjusts goals, so people are gently guided toward desired actions without forcing them.
Information design is another cybernetic tool: changing what people see, how choices are framed, or which option is the default, can steer decisions. These are simple, low-coercion nudges that rely on how information flows through a system rather than on rules or rewards.
Automation and models let nudges be personalised and scaled. Algorithms can adapt timing and content to individual patterns, but that power raises ethical concerns: transparency, consent, and accountability are essential to prevent manipulation.
Principal ideas
The book's first part offers the Nudge principles (rather like a toolkit), whereas the second part describes and offers 'Nudge' solutions to challenges in the US economy/society.
Libertarian paternalism
This is the guiding philosophy behind nudge concepts and is an ethical reference against their abuse. Thaler and Sunstein emphasise the need for nudge methods to be guided by a need to protect people's freedom of choice, to have compassion for people and society and to care for the environment and future of the planet, not to enrich the already powerful and wealthy:
"...when we use the term 'libertarian' to modify the word 'paternalism', we simply mean 'liberty-preserving'..."
Paternalism refers to any leader's responsibility for people and the planet. 'Libertarian' refers to the freedom that people should have in making their own choices and the need to protect free will.
Thaler and Sunstein said of nudge theory's underpinning philosophy, in underlining the need to preserve free choice:
"...Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not..."
Given that nudge theory logically operates better where people have generally positive rather than negative feelings towards the 'nudging' authority, it follows that we must consider the factors that generate these feelings and define the relationships between authority and people.
Nudge theory philosophy can, therefore, be extended beyond 'libertarian paternalism' to acknowledge and include anything which determines how people feel about the 'nudging' authority. This varies according to situations and, to different degrees, entails issues of ethics and integrity, empathy and trust, corporate governance, the psychological contract, and other major factors which form opinions and feelings in people.
Choice architecture
This is Thaler-Sunstein terminology for someone (or a body) who leads or manages the application of 'Nudge' theory and, by extension, a governing organisation or leadership that uses Nudge techniques in seeking to change a group's behaviour. The terminology 'choice architect' emphasises that change is enabled by designing choices for people, which encourage them to make decisions, ideally towards positive, helpful outcomes:
In a school cafeteria experiment, the arrangement of food items was altered (e.g., placing carrots vs. fries at eye level). This simple rearrangement significantly influenced students' choices, increasing or decreasing consumption of specific foods by up to 25% without changing the menu itself.
Schiphol Airport in Amsterdam etched houseflies into urinals. This visual target incentivised aiming and reduced spillage by 80%.
Also, the judgement of 'positive outcomes' must be made by the people undergoing the change. That is to say, the leadership is not the final judge of whether a change in people is helpful and good – the people themselves must judge this.
The style and reputation of the 'choice architect', as perceived by the people being 'nudged', can be a major factor influencing the success of applying nudge theory. In many situations where nudge theory is used or can be used, the people being 'nudged' will have feelings of one sort or another towards the 'choice architect' (or whatever/whoever is perceived as this authority). These feelings influence people's openness to cooperation and having a positive reaction to being 'nudged'. So an effective 'choice architect' must be defined more broadly than simply 'the application of a nudge process'; we must extend this to anything which determines how people feel towards the 'nudging' authority.
These feelings also extend to prominent personalities/bodies perceived to be associated with the 'nudging' authority. (This is why corporations use famous 'popular' and relevant endorsees to support their brands.)
A 'nudge' concerning well-being which is endorsed by the Dalai Lama is more likely to be received positively than if the same 'nudge' were endorsed by a poorly regarded politician or corporate leader. A 'nudge' aimed at encouraging people to increase their physical fitness and exercise would be more positively and credibly received if endorsed by a popular sportsperson than the Dalai Lama.
How People Think and Decide (heuristics)
Thaler and Sunstein assert and offer research/evidence that people's decision-making thinking is generally not very clever or logical and is commonly unhelpful or even harmful (to the people facing choices and making the decisions).
The authors refer technically to this area of human fallibility as 'heuristics', which in the context of nudge theory basically means the various internal references and responses which people use in assessing things, developing views, and making decisions.
In nudge theory, heuristics equate to 'nudges'. Thaler and Sunstein use the phrase 'rules of thumb' to introduce and explain heuristics in the context of nudge theory, which refers more to the faulty thinking/deciding commonly arising from human weaknesses, habits, conditioning, etc.
The word 'heuristics' basically means 'self-discovery' (from the Greek 'heuriskein', 'find'), although, in the context of nudge theory, 'heuristics' more broadly refers to the various internal references and responses which people use in assessing things, developing views, and making decisions. By its internal nature, heuristic thinking tends to be personal, emotional, subjective, and instinctive.
The Monty Hall 'closed door' probability problem is an example of faulty human heuristic thinking: it is a probability puzzle based on a game show scenario where a contestant chooses one of three doors, behind one of which is a car and behind the others are goats. After the contestant picks a door, the host, who knows what is behind each door, opens another door revealing a goat and offers the contestant a chance to switch their choice to the remaining unopened door, which statistically increases their chances of winning the car from 1/3 to 2/3 if they switch.
The probability of winning if you stay with the original choice: 1/3. The probability of winning if you switch to the other door: 2/3. Many people believe that after one door is opened, the odds are 50/50 between the two remaining doors. This is incorrect. The host's action of revealing a goat provides additional information that affects the probabilities, reinforcing that switching doors increases the chances of winning.
The three basic heuristics in Nudge are based on the research of Daniel Kahneman and Amos Tversky, specifically their identification in their 1970s 'rules of thumb', which people tend to use when considering and deciding about unknowns:
Anchoring and Adjustment' - comparing, then guessing from that subjective reference point:
Default: "Try to walk 7,000 steps daily."
Nudge prompt with anchor: "People similar to you average 9,000 steps per day — aim for 9,000 today."
'Availability' means perceived frequency, commonness, and familiarity with something:
Default: "When are you available for a meeting?"
Nudge prompt with anchor: "Most people here are available Tuesday or Thursday at 10:00 AM. Is one of those times good for you?"
'Representativeness' – comparison based on (often unreliable subjective) stereotypes:
Default: "Report any symptoms you’re experiencing."
Representativeness nudge: "People your age with these symptoms usually have a mild viral illness and it's likely the same for you."
Thaler and Sunstein assembled a suite of sub-theories and named them to create a cohesive series of elements by which nudge theory can be understood and applied, rather like a series of techniques which can be used as a 'toolkit':
Optimism/overconfidence (under/overestimation or complacency): When people mismanage their household budgets by spending too much of their monthly salary in the first couple of weeks of the month, this is typically due to the optimism heuristic.
Loss aversion (holding on to things/resistance) and 'status quo bias' (inertia): Thaler and Sunstein assert that: "...Roughly speaking, losing something makes you twice as miserable as gaining the same thing makes you happy..."
Status quo bias (inertia, default to no action): Logically, the authors say that inertia is produced by the human tendency to avoid change, effort, risk, etc., which in turn may be due to laziness, aversion to time-consuming complexity (for example, in understanding complicated options), and/or simply a discomfort felt when considering changing something.
Framing (orientation, accentuation, presentation, styling): if a medical consultant focuses on death rates, people are put off treatment, whereas a focus on survival rates tends to increase agreement for treatment, without any alteration of the actual figures. It's a matter of orientation and presentation, or 'framing'.
Temptation (greed, ego, short-term reward): Every day around the globe, millions of intelligent, mature people gamble collectively millions of dollars on lotteries, which these people know offer odds of several million-to-one against winning a major prize. They do this mainly because for them the temptation heuristic is more powerful than facts and logic.
Mindlessness (negligence, avoidance, not concentrating): Mindlessness is the tendency for people to form views and decisions carelessly. For example, a perceived 'free' or discount offer can be intentionally distracting, encouraging people to ignore more important issues. Where retailers exaggerate discounts by stating artificially high previous selling prices, they are deliberately trying to produce and exploit mindlessness in people.
Self-control strategies (habits and routines to counter weaknesses): Thaler and Sunstein give the example of people who put their alarm clocks out of reach as a strategy to counter the 'temptation' heuristic, which encourages people to switch off the alarm and go back to sleep.
Following the herd (conforming, mob instinct, safety in numbers): The analogous fairy tale of 'The Emperor's New Clothes' illustrates the bizarre susceptibility of humans to conform to a perceived majority belief, even if unproven or plainly daft.
Spotlight effect (anxiety, pressure, "...everyone's watching my decision", fear of making errors): The result of the 'spotlight effect' heuristic is to pressurise our thinking and decision-making, one way or another, as if everyone were judging us and/or dependent upon our decision.
Priming – (the ways people can be made ready or prepared before thinking and deciding, e.g., visualisation, role-modelling, building belief, offering methods not just directions): The Hawthorne effect is similar to Bentham's panopticon. It refers to the phenomenon where individuals change their behaviour because they know they are being observed. This effect can lead to temporary increases in productivity or performance, as seen in various studies, but may not reflect true behaviour when not under observation.
Stimulus-response compatibility is the design of signage and language so that it looks and seems appropriate for the message it conveys. In other words, is our brain being tricked? Example:
How many 'f's?
FINE POINT
It is easy to miss the finer
points in life. Folk are
frequently guilty of falling
into this trap.
(The letter 'f' appears eight times. People commonly count seven by failing to see the second last f.)
Feedback is given to respondent during and after thinking/decisions, enabling adjustment and useful experience). In road diversions, good feedback offers signs informing people of mistakes and signs directing people back to the correct route. Poor feedback fails to anticipate that some people may find themselves on the wrong road and allows people to continue unaware of their mistakes, often becoming completely lost.
Humans and Econs
Thaler and Sunstein illustrate the contrast between (irrational 'dumb', very common) human behaviour and (rational 'smart', far less common) logical behaviour by presenting two (notionally) different types of people, which they called 'human' and 'econ'.
'Humans' are (what we might consider) 'real' people, who make 'real' human decisions (or fail to make a decision), driven by a wide range of human considerations and factors such as inertia, optimism, denial, lethargy, the inability to delay gratification, and false assumptions. This is a view of people/society from a 'reality' perspective.
'Econs' are an imaginary type of people, imagined to exist by economists, politicians, academics, etc. Econs are always imagined to think logically and rationally and are not influenced by the various heuristic factors such as inertia, optimism, denial, lethargy, the inability to delay gratification, false assumptions, and more, which generally cause 'humans' to behave in ways that are irrationally unhelpful, destructive, neglectful, etc. 'Econs' are a view of people and society from an unrealistic perspective.
Thaler and Sunstein do not actually say that most politicians and corporate bosses believe that the world is populated by 'econs', but this is certainly implied. There is a 'flip side' to this, namely that certain people in many corporations and governments understand extremely well that people often think and decide very instinctively and irrationally, and they exploit these weaknesses by using 'nudge' methods for cynical and unhelpful purposes. A great benefit of nudge theory is being able to see more clearly where and how this cynicism is at work and potentially confront and modify it.
Automatic vs Reflective Systems of Thinking
According to the Thaler-Sunstein nudge theory, based on the previously developed Kahneman/Tversky 1970s theory, 'Humans' are characterised as thinking 'automatically'.; 'Econs' are characterised as thinking 'reflectively'. Thaler and Sunstein suggest that people use reflective decision-making very commonly, even for very important situations, such as in electoral voting, investing, major purchases, life decisions, etc.
Automatic thinking is very useful in certain situations, but in other situations may be unhelpful, where more careful rational ('reflective') thinking is required. The tendency for humans to behave and think like 'humans' and not like robotic 'econs' is a major factor in the success of humans as a species. Early humans and tribal groups who were able to think quickly and instinctively had a big advantage compared to humans who could not. And so this capability/tendency became dominant in people via natural selection.
These two different methods of thinking and deciding are not bad or good in themselves. Situations often demand one or the other, and people in modern times are not generally very good at using the right one or balancing the use of both methods. The difficulty in modern times is because of the pressure and scale of populations, misinformation, and distraction.
Themes
The advantages of nudging
Better outcomes for individuals: nudging can help make better choices that will make people healthier and richer. Banks and financial services could use nudging to encourage their customers to set up savings accounts and save money. For instance, by asking them to commit to transferring a certain percentage of their salary to their savings every month.
Nudging can also be used to promote healthier lifestyle choices, such as placing fruits, vegetables, and other healthy foods on shelves that are easier to reach, or offering gym memberships along with other related purchases.
Better outcomes for society. For instance, it could be used to encourage more people to become organ donors, reducing the wait for people who require organ donations and thus saving more lives. The UK government switched from an opt-in to an opt-out system for organ donations, which has already been adopted in Argentina, Brazil, Austria, Belgium, Spain and other countries. Opt-out schemes have been found to increase organ donations from 20 per cent to 80 per cent on average.
Informing and empowering people. In some cases, nudging can also be a very effective way of informing people about the risks associated with specific choices or behaviours and so improving their decision-making. An example of this was when nudging was used in the battle against growing antimicrobial resistance because of the abuse and over-prescription of antibiotics. The UK's National Health Service (NHS) started testing the use of nudges to reduce the use of antibiotics or other drugs that can have adverse long-term effects. More specifically, some general practitioners were sent letters simply informing them that they were prescribing antibiotic drugs at a higher rate than their peers. The implicit social pressure of highlighting that they were behaving differently from their peers resulted in a noticeable reduction in their over-prescribing.
After the COVID-19 vaccine was introduced, some governments also used nudging to increase vaccination rates. This included sending reminders or informing people about the benefits of the vaccine through the voice of healthcare workers or other expert speakers. Some messages were targeted to ensure they came from people who were representative of an individual's own community, who were similar to them and who they could directly empathise with. These different elements of expertise and similarity in the messenger help to reassure and encourage people when making decisions.
The disadvantages of nudging
Getting it right is not always easy. While nudging can have positive effects, using it effectively is far from an easy task. Before introducing a nudge, one should consider many different factors, including the extent to which it could have a positive impact. For instance, the UK government made it mandatory for people who work a certain number of hours to pay into a pension scheme. As this pension scheme was the minimum that one could possibly pay into, it would most likely not be enough to grant them financial stability after retirement. However, since they were paying for this minimum pension scheme, many people assumed the issue was dealt with for them and so did not sign up for better ones, which means that the nudging intervention backfired.
An area in which nudging can be tricky to implement is to promote the protection of the environment and increase sustainable behaviours. For instance, some researchers found that by attaching a fake set of eyes above a light switch, they could encourage people to turn the light off more often while leaving the room. While this is an interesting finding, these interventions might end up having very little impact on climate change and emissions overall, given that many people now use energy-efficient lightbulbs. Even worse, such conspicuous interventions allow people to reassure themselves that they are 'doing their bit' and can distract from other, more impactful changes that they could make.
Unexpected outcomes. One of the reasons why nudging is difficult to implement is that its outcomes are not always easy to predict. Even in cases where the behavioural effects of an intervention seem obvious, nudging can backfire and even lead to entirely opposite outcomes. For example, one project aimed at reducing the average household's energy consumption by sending out letters informing people of how much they were using compared to others in their neighbourhood. While these letters prompted some high consumers to limit their energy use, they also had unexpected effects, with people who learned that they consumed less energy than others in their area starting to increase their usage.
Inappropriate use. Ideally nudging should be used to encourage people to make wiser, healthier, and overall better choices that benefit them and others around them. At times, however, nudging is implemented in ways that do not necessarily benefit individuals or consumers, for instance, when devising deceptive marketing strategies that encourage people to buy a specific product.
In some cases, interventions aimed at increasing people’s motivation at work and improving their performance can also backfire, particularly if they place too much emphasis on competition in a collaborative environment, such as bonus schemes or incentives for individual employees. When trying to use nudging to improve productivity, it might be wiser to offer collaborative teamwork incentives that encourage employees to perform well as a group.
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