Behavioural Economics - Choice Architecture & Nudging

In this episode, we dive into one of the most fascinating and practical concepts in behavioural economics: Choice Architecture and Nudging.

Discover how subtle changes in decision-making environments—like default options, framing effects, and social norms—can dramatically influence behaviour.

Choice architecture is a term used in behavioural economics to describe the design of the decision-making environment, or the way in which choices are presented to people. It refers to the practice of organising and framing choices in such a way that they influence or "nudge" individuals towards making specific decisions without restricting their freedom of choice.

Choice architecture is based on the idea that people's choices are not solely determined by their rational preferences, but are also influenced by the context in which those choices are presented. By understanding how people make decisions and what factors influence their choices, policy makers, marketers, and other professionals can create environments that promote better decision making.Some common techniques used in choice architecture include:

1. Default options: Setting a particular choice as the default option, which individuals must actively opt out of if they wish to choose differently.
2. Framing: Presenting information in a specific way that highlights certain aspects or attributes, which can influence people's perception of a choice's value or attractiveness.
3. Anchoring: Providing an initial reference point, such as a suggested donation amount, which can serve as an anchor for subsequent choices.