Nudge: Improving Decisions About Health, Wealth, and Happiness

These are three common heuristic devices (rules of thumb) that humans use to aid decision-making. Each, though useful, can lead to systematic biases in judgment. Anchoring occurs when an individual uses a known piece of information as a basis for judging unknowns. Availability occurs when an individual believes something to be more or less common than something else based on limited available examples. Representativeness occurs when an instance or example of something is used, perhaps incorrectly, as a representation of the whole.

Any individual who has the power to alter the context in which choices are made. The architect does not make decisions for others but nudges them in a particular direction or away from others. Small changes in choice architecture can have a tremendous impact on decisions.

Default options are an essential component of choices. The default is what happens when no active choice is made on the part of the potential decision-maker. Thaler and Sunstein note that choice architects must attend to default options because many people (from inertia, inattention, or otherwise) will passively choose it. They note that it is impossible not to have a default, even if the default mandates a choice from the potential decision-maker.