We attended a great talk last night at the British Academy by Cass Sunstein, expert on behavioural economics, Professor of Law at Harvard Law School, co-author of the well-known book 'Nudge' and was formerly part of the Obama administration.
He spoke last night on 'Deciding by default', and how to tailor different kinds of defaults to different situations, specifically:
- 1) Impersonal, one-size fits all defaults (eg auto-enrolment into pensions)
- 2) Active choosing or required choice (such as that used by the UK to encourage organ donation registration currently, by asking people if they want to register when they are applying for a driving license.)
- 3) Personalised defaults (eg using personal preference information to tailor defaults to the individual)
After introducing these defaults, he then discussed when is best to apply each method:
- Impersonal defaults are good when people are homogeneous or if the choice is complex.
- If people are diverse and will enjoy making choices eg choosing what to eat from a menu, or if the choice architect does not have good info or can't be trusted, active choosing is better.
- Personalised defaults are best when people are diverse and when choice architects have good information about individuals.
- Dynamic defaults: He also suggested that another approach might be to set up active choosing to gather information about choices by different consumers and use that to later switch to personalised defaults.
- Neutrality: When using active choosing it is important to make sure that the choice is presented to the individual in a neutral way eg avoid framing by saying '90% fat-free. 10% fat. Order effects are difficult to avoid, but framing effects can be minimised.
His talk was based on his recent paper on defaults, which we also discussed in our recent article 'Big Data empowers personalised defaults'.
