Decision-making & Analytics
EFFECTIVE MANAGEMENT
Rose-tainted glasses Is bias causing management mistakes?
The third made it clear that the nudge initiative was intended solely to reduce costs, motivated by the university’s duty to use resources efficiently. We then repeated these experiments using the same scenario but introduced a new element – deception. This allowed us to investigate the findings of previous research, which suggested that scepticism over the motives behind a seemingly prosocial activity may have a bearing on how they are viewed and the impact they have. In the version of the scenario that combined prosocial and profit-driven motives, the university emphasised its duty to encourage students to eat healthily. However, it was clear in the details we provided to students that the financial benefit to the university – in the form of reducing costs and increased salaries – was the only real objective. Nearly 5,000 participants scored their support for different versions of the nudging scenario on a seven-point scale that ranged from ‘not at all’ to ‘very much’. Our results were encouraging. Unlike previous research on altruism, we found no evidence for a strong tainting effect. Nudges that created a social benefit were always perceived more positively than those that were solely born of self-interest. There was a degree of tainting. Interventions that produced a profit as well as a social benefit were viewed less positively than those that only produced social benefits. But they still received good overall support. However, the tainting effect was amplified when people knew that an organisation was being deceptive about its reasons for using a nudge. In these cases, the negative impact of the deception cancelled out the positive impact of providing a social benefit.
by Nick Chater
The important lesson is that people care about the way that nudges are designed and communicated to them. They notice whether a nudge is purely prosocial or has an element of self-interest, and whether an organisation is being honest about the motive behind an intervention. Furthermore, their perception of a nudge may range from strongly positive to overwhelmingly negative as a result. People need to be satisfied that an organisation’s motives for nudging are good in order to judge that organisation positively. Consequently, policymakers and organisations need to be aware that the way they design and communicate a nudge intervention “Honesty appears to be the best policy”
is likely to affect people’s perception of it – and their response to it. Honesty appears to be the best policy. Managers and policymakers should be transparent about their motives when implementing nudges and avoid creating an impression that they are being deceptive. If a nudge creates gains for the organisation doing the nudging, as well as a social benefit, then it is better to be open about the situation, rather than jeopardising public confidence by trying to play down or conceal the benefits to the organisation. By giving customers all the information and trusting them to reach a fair conclusion, an open approach to nudging really can create a win-win scenario for businesses and society alike.
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