How to Influence People’s Decisions: Notes on “Nudge”

Before diving into the details, let’s talk about a social topic: organ donation. There are two main strategies used worldwide:

• Presumed consent — where you must opt out to avoid becoming a donor.
• Explicit consent — where you must opt in to a registry to become a potential donor.

Here are two questions that can help you think more deeply and dive into the book:

1. What are the “theoretical” donation rates in countries that employ different strategies?
2. What are the “actual” donation rates in these countries?

This book will answer both questions. The first question relates to people’s thinking behaviors. The second question relates to the real-world challenges that choice architects face—and how they can nudge people to make better decisions. It also touches on the ethics of choice architecture.

You’ll find the answers as you continue reading the article :)

This article will first explain the main concepts, followed by detailed reading notes, part by part.

Concepts

Choices Are Everywhere

Besides big issues like organ donation or voting, we make choices every day and are influenced by the choices of others.

For example, when grocery shopping, you may notice the drinking water is usually in the back of the supermarket. You go in just wanting to grab some water but end up buying a lot more after passing by various stacks that catch your eye.

This is a deliberate choice made by the store to maximize profits and influence your decision.

But you can resist temptation by writing a grocery list and focusing only on what you need.

Lots of back and forth, right?

Choices Options Not Neutral

This book uses the term “choice architect” to refer to designers who provide options to users. Even if a choice architect claims they have no preferences and just “leaves the options as they are,” they still influence people toward certain decisions.

People tend to stick with the default (status quo bias) or follow what others recommend (social influence bias). So, inaction is also a form of action. Whether we leave things as they are, provide options, or offer none at all, we’re still favoring some choices.

That’s where light interventions—also called nudges—come in. By designing the choice architecture, the architect encourages people to make certain favorable choices.

This raises a question: Can people’s biases be exploited in harmful ways, and can choice architecture be used against their own best interests?

The answer is: yes, especially in the private sector.

For example, gyms may take advantage of present bias to get people to subscribe—offering cheap initial fees, then raising them later. Or in gambling (as I discussed in this article), slot machines in Las Vegas use “near-miss” effects to trick players into thinking they almost won—nudging them to play “just once more” again and again.

But this book mainly focuses on how to influence people to make better choices. That means designing choice architecture in a way that’s consistent with what people would choose if:

1. They had all the relevant information,
2. They weren’t subject to cognitive biases,
3. They had the time to think carefully.

Detailed Reading Notes

Part 1: How We Think and Choose

This part focuses on how our thinking systems influence our behaviors and how we make choices.

Human Fallibility

Humans have two thinking systems: System 1 is the automatic system, which we share with simpler animals like lizards. It’s fast, effortless, and unconscious. System 2 is the reflective system—slow, effortful, and self-aware.

To make our lives easier, we can’t activate System 2 every time. Imagine having to rethink your commuting route every day or always reconsidering the best option instead of picking the familiar one by default. We often rely on shortcuts, which means we’re easily prone to biases due to System 1.

The book details several biases that arise when using System 1:

1. Anchoring: People often start with something they know and then adjust. For example, when asked about their happiness level and their recent dating/sex life in order, they tend to link their answers—even though many factors influence happiness.
2. Availability: We tend to recall recent or vivid information more easily. For example, people fear hurricanes because they’ve seen the damage, but they often underestimate the actual probability.
3. Representativeness: We often choose a specific description over a broader category. For example, if given a detailed description of a woman, people are more likely to think she fits that description and is a woman, instead of just a woman.
4. Optimism and Overconfidence: People tend to think they’re the lucky ones. Even smokers who read about the risks of lung cancer often believe those risks don’t apply to them.
5. Loss Aversion: People hate losing or paying extra. A good example is reducing plastic bag usage by charging a small fee—people will avoid the loss.
6. Status Quo Bias: When not paying attention, people go on autopilot. Think about binge-watching a TV series all day—thanks to autoplay, we just follow along without deciding.
7. Framing: How information is presented matters. Imagine you’re a doctor giving advice. Saying “90% survived in 5 years” feels more comforting than “10% died in 5 years,” even though both mean the same.

Choice architects can make use of these biases—nudging people subtly by designing the environment around their decisions.

Resisting Temptation

Sometimes, we do activate System 2 to resist temptation. For example, to avoid binge-watching, you might plan a weekend outing in advance.

People can use commitment strategies—just like Ulysses used wax to resist the Sirens. Self-control can come from external supports, like saving money in a Christmas account you can only withdraw during the holidays, or internal strategies like mental accounting.

This mental accounting idea also appears in gambling: when players bet with their own money, they’re more cautious; but with money they’ve just won, they take bigger risks. In real life:

• For someone who doesn’t feel financially secure, a “rainy day” account helps prepare for emergencies.
• For someone who saves too much, an “entertainment” account can help them enjoy life a bit.

Choice architects can support these behaviors by helping people commit in advance or build in self-control mechanisms.

How and Why Social Influence Works

Humans are social animals. We’re easily influenced by others. For instance, when someone speaks confidently and calmly, we tend to believe them—and might still believe their statements years later. Also, small group nudges can trigger large cascades (#MeToo) as more people tend to speak up and tell their stories.

Our actions and thoughts are shaped by identity too. Take Texas’s slogan “Don’t mess with Texas”—it appeals to cultural pride and encourages people to to reduce litter.

So, choice architects can leverage these effects—nudging people by presenting salient information or reminding them of their shared identities.

Part 2: The Tools of the Choice Architect

People make poor choices not just because of internal thinking patterns, but also due to external factors—like the lack of prompt feedback or limited chances to practice. Competitive markets can also exploit human weaknesses. Think of “snake oil” products claiming to cure everything.

Based on how humans think and choose, choice architects can use different tools to encourage good behavior. The goal is to shape System 1 responses (biases) or activate System 2 when people are calm (resisting temptation).

Here are the key principles:

1. Provide better default options: People don’t like to change defaults due to status quo bias. For example, consider organ donation. What’s the theoretical donation rate in countries with different default strategies? In opt-out systems, it’s over 99%—most people don’t go through the hassle of opting out.
2. Help people avoid expected errors: ATMs force you to take your card before giving cash to prevent you from forgetting your card.
3. Provide prompt feedback: Like a low battery warning—it helps you react in time.
4. Map choices to outcomes: Help people understand consequences. For example, doctors could present treatment plans with a 0–5 scale to help patients easily compare.
5. Structure complex choices: Use tools like collaborative filtering (e.g., recommendations based on what your friends like) or help rule out options based on what matters most.
6. Offer good incentives: Make it fun or painful (via loss aversion), and ensure high-quality options.
7. Curate choices: A wide range isn’t always better. Curated options, like on Amazon or in local bookstores, are often more helpful.

Choice architects can also influence the provider side—companies and markets—by ensuring transparency, competitiveness, and fairness.

For exmaple, make it easy for users to understand options with simple measures. For instance, when comparing cars, using “liters per 100 km” makes fuel efficiency easier to grasp.

Also, users shouldn’t be locked into one provider and usage data should be transferable. And when overwhelmed by options, people should be able to use third-party services to compare, as long as the service terms and data are accessible.

However, companies can use nudges in a harmful way—what the authors call sludge. These lead to worse outcomes. For example, a cheap printer might seem like a good deal, but hidden costs like expensive, brand-specific ink make it costly in the long run.

Part 3: Money

This part focues on how to improve people’s financial well-being.

Retirement plan

For retirement savings, we want people to have more money to use when they age (like how people always say they should save more). Besides, retirement plans also offer benefits like tax deductions, tax deferral, and employer matching contributions (which is essentially free money).

So the overall goals here include:

1. Increasing enrollment rates – using automatic enrollment with an opt-out option (this leverages inertia bias, as most people stick with the default, effortless options).
2. Increasing the saving rate – using automatic escalation (this uses present bias, as the initial saving rate is low but increases gradually, and people tend to undervalue their future selves’ needs).
3. Ensuring the money is invested wisely over decades – using strategies like target-date funds.

As for the Swedish pension system, since it’s mandatory and has a fixed 16% contribution rate, it solves the first two problems. The challenge lies in investment fund selection.

A default option is provided if people don’t choose, but companies can use marketing strategies to promote specific funds.

However, studies found that active choosers do not perform better than passive ones. The default option tends to have lower management fees and more balanced investment portfolios.

Also, while some people actively choose funds at the beginning, they often don’t change them for years. From the government’s side, sending reminders for people to review their investment choices might lead to better outcomes.

There are also concerns that encouraging more retirement savings could lead to increased debt, but the authors mention that research shows it does not increase household debt.

Mortgage & Credit Cards

While both mortgages and credit cards involve borrowing tomorrow’s money to spend today, they function quite differently.

With a mortgage, if you choose the right plan at the start and pay your bills on time, it usually doesn’t cause many issues.

Credit cards, on the other hand, depend much more on how they’re used. If you pay off the bill every month and use rewards like miles, they can be beneficial. But some people suffer from high interest rates if they forget or simply can’t pay the bill.

So, how can people choose the right mortgage and use credit cards wisely?

Mortgage

For mortgages, the authors highlight problems like teaser rates (low initial rates that spike later) and conflicts of interest with real estate agents (since agents earn more if you pay more).

A helpful nudge could be requiring banks to clearly present all information in a standardized format – for example, where users just choose the duration and APR.

However, some tricky products like teaser rates don’t fit neatly into this model. That’s where smart disclosure helps. If banks present data in a structured format, third-party comparison tools can step in to help.

Credit Cards

Credit cards can also benefit from nudges. For example, overdraft protection—which lets you withdraw cash even when your balance is insufficient—should not be enabled by default; users ought to opt in intentionally. Conversely, automatic payments should be activated by default to help avoid high interest charges.

With smart disclosure, when users are on a tight budget, they can easily compare minimum payments and interest rates to understand how to pay off debt with the lowest cost.

Insurance

We need insurance to protect against bad events, but we also want to pick lower-cost plans – typically, those with higher deductibles.

Why? Because with smaller deductibles, if you make a claim this year, your fees will likely increase next year.

But what happens when we get sick and avoid going to the doctor because we know insurance won’t reimburse us fully? To avoid this kind of loss aversion, the authors suggest opening a mental account – called “on my own account.”

For example, extended warranties for microwaves are usually unnecessary since they rarely break. Instead of buying that insurance, you can just save the money in your personal “on my own account.”

Some companies offer incentives to add money to Health Savings Accounts (HSAs) if employees choose the highest deductible plan – another form of “on my own account.”

This strategy also helps reduce medical costs, because when people pay out of pocket, they think more carefully before going to the doctor.

Part 4: Society

This part focuses on how to encourage people to take actions that benefit others.

Organ Donation

Here we will reveal the answer to the second question: what are the actual donation rates?

Even with presumed consent—where 99% of people are defaulted to donate—some countries still have low actual donation rates. For example, France’s actual donation rate is only 28.8%.

This presents a paradox: why is the conversion rate so low?

Just because someone didn’t opt out doesn’t mean they truly wanted to donate—they may simply end with default options and have overlooked the paperwork. And when people fail to make an active choice, their families often must decide after death, even in opt-out countries. At that emotionally overwhelming moment, relatives are often uncertain of their loved one’s wishes and tend to err on the side of declining donation.

The book discusses the need to both increase organ availability (to help patients) and respect the wishes of potential donors and their families.

In short, when a decision is made by one person (the donor) but the benefit goes to a third party (the patient), we shouldn’t rely on default choices.

Still, we do want to save more lives. So nudges are used to encourage people to opt in:

• Make it easy to sign up (via websites)
• Raise awareness through media campaigns
• Present the option during key life events (e.g., renewing a driver’s license, voting, filing taxes)

Once someone makes a clear decision, their wishes should be honored (first-person consent laws). This way, families are spared from making tough decisions later.

Some countries also explore incentives – for example, giving higher transplant priority to patients whose close relatives have donated organs before.

Climate Change

Just like the biases explored earlier—such as present bias and loss aversion—people tend to prefer lifestyles or products that provide immediate benefits. For instance, although energy-efficient washing machines can save money in the long run, people may avoid them because the upfront cost is higher or they believe the machines are less effective.

There’s also the issue of the “tragedy of the commons:” if some people or companies don’t do their part, others feel less inclined to act.

The authors suggest some solutions. One is using monetary incentives. For example, raising fuel taxes to push people to innovate in energy use or implementing pollution permit trading systems. Another is regulatory mandates. In cases where consumers consistently fail to make decisions that benefit both themselves and the planet—like choosing inefficient washing machines—governments can step in with strict regulations instead of relying on incentives.

On top of that, nudges can help. For example, using loss aversion: in the U.S., the Toxics Release Inventory requires companies to publicly report their use of toxic materials. To avoid being listed (which could negatively affect their stock prices), companies reduce their use of such materials. A similar approach could be applied to greenhouse gases—tracking major emitters and encouraging them to reduce emissions.

We can also make default options more environmentally friendly. For example, energy providers can default to green energy. People can also be nudged to save more energy by using social influences - comparing their consumption to that of their neighbors.

Reflection on Part 3 & Part 4: Who Benefits?

When it comes to money, the choice architecture is simpler—because the people making the choices are also the ones who benefit. But in Part 4: Society, people often make choices where the benefits go to others.

So in these two cases:

1. When the decision-maker and the beneficiary are the same (as in the case of money), we prefer to nudge people toward the choices they would make if they had all the information, weren’t influenced by biases, and had the time to make thoughtful decisions. We believe people would appreciate these choices because they align with their own goals. So in this case, strategies like default options can be effective and appropriate.
2. When the decision-maker and the beneficiary are not the same, we must first respect the freedom and wishes of the decision-makers. Still, we can promote choices that increase overall social benefit—like saving patients’ lives or protecting the planet—by gently nudging people in that direction, while still honoring their autonomy. For example, in the case of organ donation, we prefer an opt-in system, where people are encouraged to make a clear choice themselves.

Part 5: The Complaints Department

The book analyzes the following complaints:

Will Nudging Limit People’s Freedom of Choice?

The short answer is: No.

The book introduces the concept of libertarian paternalism, which means nudging people without taking away their freedom of choice.

• “Paternalism” refers to efforts to improve people’s well-being through light-touch interventions.
• “Libertarian” means that people are still free to make their own decisions and ignore those interventions.

In a nudged choice architecture, it’s not about forcing a mandated choice like “yes” or “no.” Even with automatic enrollment, you can opt out. Even with default options, you can choose something else.

No one is forced into a decision or locked in permanently.

Will nudges (light-weight interventions) eventually lead to radical measures?

The authors point out that most of these arguments lack empirical evidence and are mainly driven by fear. For example, some people once opposed women’s voting rights because they feared feminists would take over politics. Similarly, gun supporters argue that restricting guns is like banning kitchen knives.

There is no need to worry about “nudge creep”—as long as we preserve freedom of choice, we can avoid coercion.

Take this example: some people are allergic to shrimp. Instead of banning shrimp (which would be coercive), we place warnings on products (a nudge).

Is it better not to provide default options (nudges) and just let people choose?

Inaction is also a form of action. People are subject to various biases and may ultimately make poor choices for themselves.

When given over a hundred options, people may experience the paradox of choice: they struggle to make a decision and may end up choosing nothing at all. (Personal thought: Some people may not even enroll in pension plans due to decision fatigue.)

Therefore, it’s better to provide a good default option, allow them to change it, and respect their choice not to choose.

Can we educate people to avoid biases instead of nudging?

Some argue that nudging suggests people are stupid, and that education (“boosts”) is a better solution for improving decision-making.

The authors emphasize that education and nudges are not mutually exclusive.

For example, would people choose better mortgage options if they received financial training? The book cites research showing that while high-school financial literacy training can help people make better decisions in the short term, the benefits fade within two years. In Thinking, Fast and Slow, many experiments were done with Ivy League students—yet even they fall prey to System 2 biases. So it’s not just about education and training; the world is complicated, and people often make mistakes.

That’s why it’s better to make decisions easier—by offering curated options with sensible defaults. Also, many nudges include educational components like disclosures and reminders.

Are nudges manipulative and non-transparent?

Some argue that nudges manipulate people. However, the authors point out that choice architects can publicly share their intentions—which itself can positively influence people’s decisions. Nudges should also be made publicly available, and opt-out options should be easy to access.

Also, any nudge should allow for public debate. For instance, nudges related to organ donation should involve public consultation.

Will nudges replace the role of mandates and bans?

In the chapter on climate change, the authors already mention that mandates are sometimes necessary to help people make better choices—for example, banning the rental of apartments with poor energy ratings.

The authors emphasize that we should use a mix of tools. A cost-benefit analysis should guide decisions about whether mandates are needed.