Nudge Theory and Decision Making: Enabling People to Make Better Choices

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Author(s): Vikramsinh Amarsinh Patil (Symbiosis International University, India)
Copyright: 2020
Pages: 20
Source title: Multi-Criteria Decision Analysis in Management
Source Author(s)/Editor(s): Abhishek Behl (Indian Institute of Technology, Bombay, India)
DOI: 10.4018/978-1-7998-2216-5.ch014

Keywords: Business & Management / Business Science Reference / Decision Support Systems / Management Science

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Abstract

This chapter examines the theoretical underpinnings of nudge theory and makes a case for incorporating nudging into the decision-making process in corporate contexts. Nudging and more broadly behavioural economics have become buzzwords on account of the seminal work that has been done by economists and highly publicized interventions employed by governments to support national priorities. Firms are not to be left behind, however. What follows is extensive documentation of such firms that have successfully employed nudging techniques. The examples are segmented by the nudge recipient, namely - managers, employees, and consumers. Firms can guide managers to become better leaders, employees to become more productive, and consumers to stay loyal. However, nudging is not without its pitfalls. It can be used towards nefarious ends and be notoriously difficult to implement and execute. Therefore, nudges should be rigorously tested via experimentation and should be ethically sound.

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