Nudge theory, first introduced by Richard Thaler and Cass Sunstein in their 2008 book "Nudge: Improving Decisions About Health, Wealth, and Happiness," is a concept in behavioural economics that suggests small changes in the environment can influence people to make better decisions without limiting their freedom of choice.
A "nudge" is a subtle change in the environment that alters people's behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. For example, a nudge could be as simple as placing healthy food at eye level in a cafeteria, making it more likely that people will choose those options over less healthy options.
One of the key principles of nudge theory is that people are often irrational in their decision-making, and small changes in the environment can lead to big differences in behaviour. This is because people are often influenced by their immediate surroundings and the context in which they are making decisions.
Nudge theory has been applied in a variety of settings, including healthcare, finance, and government. In healthcare, nudges have been used to encourage people to get vaccinated, take their medication, and make healthier choices. In finance, nudges have been used to encourage people to save more for retirement and make better investment decisions. In government, nudges have been used to increase voter turnout and encourage people to pay their taxes on time.
One of the criticisms of nudge theory is that it can be seen as paternalistic, as it suggests that people are not capable of making good decisions on their own and need to be guided. However, proponents of nudge theory argue that nudges are not meant to be prescriptive, but rather to provide people with the information and tools they need to make better decisions.
Overall, nudge theory provides a useful framework for understanding how small changes in the environment can lead to big differences in behaviour. It has been applied in a variety of settings and has the potential to improve decision-making in many areas of life.