Heuristics
of life relative to present, were offered as a secondary categorization, although practically, these would only be significant in differentiating between similar options. In turn, consumers would both be forced to learn their own preferences by inputting options for secondary factors and are then sorted to maximize both social and private welfare, solving both cited issues with each approach. Moreover, the welfare-maximizing advantages to policymakers span well beyond the use of the default bias, across many different shortcuts and biases. (Duflo, 2003) goes one further in contributing the use of heuristics to encourage improved long-term financial decision-making. Their study offered 2,000 staff from departments across a large university a $20 reward for attending an information fair about TDA (Tax Deferred Account) saving programmes. This reward encouraged a quintupled attendance rate within departments from the incentivized individuals; however, the status-quo bias also led to a tripled attendance rate from those who were not financially incentivized. Moreover, TDA enrolment increased on average 11.7% and 13.1% in departments 4.5 and 11 months after visiting the fair, with a negligible difference between the uptake of incentivized participants and their socially influenced counterparts. Again, this is consequential. If incentive to learn optimal preferences, or to encourage a certain behaviour, can be so greatly driven by social norms, this is of great use to policymakers, who may be able to lead agents towards welfare- maximizing options through use of inexpensive social manipulation. This can be seen in the recent, highly effi cacious UK government’s pro -vaccination information campaign, which encouraged vaccination by presenting it as a social norm, 8 and to some extent a social duty, and has likely contributed to the UK’s very low vaccine hesitancy rates, despite significant i nhibiting factors such as misinformation. In short, the use of heuristics has been of great use to policymakers in allowing the use of inexpensive nudges to orient consumers towards decision which maximize social welfare, without having to implement trad itional ‘shove’ policy, which may be controversial, or quite expensive. As a result, heuristics have offered great benefits in the field of social policy, as with organ donation, in which a traditional policy such as information campaigning was only so successful, as was found in the Netherlands. In an attempt to raise donation rates, they sent informative, pleading letters to every household in the country about the benefits of donation, but only achieved an organ donation rate of 27%, 9 almost a quarter of what was found to be achievable by the use of choice architecture and the default bias. Begging only gets you so far. However, the extent to which the use of heuristics can be manipulated by firms is equally, if not more, effective, and has far more damning consequences. (Wisson, 2017) studies how in monopolistic, fixed menu settings, second degree price discrimination can be used to encourage menu-based dependency, if agents are either focusing or relative thinkers, due to consumers’ anchoring bias. These fixed menu settings can be considered strongly representative of choice for consumers inside a supermarket aisle,
8 GOV.UK. (2021, February 19). New campaign to support vaccine roll-out backed by social media companies and British institutions New campaign to support vaccine roll-out backed by social media companies and British institutions - GOV.UK (www.gov.uk).
9 TED. (2009, May 19). Are we in control of our decisions? | Dan Ariely [Video]. YouTube. https://www.youtube.com/watch?v=9X68dm92HVI.
83
Made with FlippingBook - Online catalogs