A Review of Nudges: Definitions, Justifications, Effectiveness

Abstract

In an influential book published in 2008, Thaler and Sunstein suggested a novel approach to policy making based on the notion of a ‘nudge.’ Roughly speaking, a nudge is defined as an aspect of the decisional context that steers people’s decisions by acting on their cognitive biases. The book generated an intense debate, over the course of which concerns were raised about: (1) the exact definition of nudges, (2) their ethical justifiability, and (3) their effectiveness. In this paper, we review the nudge literature by focusing on these three concerns.