Getting nudges right – interests, norms and the legitimacy of choice architecture

von Robert Neumann

While the general approach of choice architecture of altering the decision contexts of individuals without limiting freedom of choice should provide several innovative and efficient regulatory tools, the criticism by various scholars usually focuses on the following: Critics claim that the influence of the regulatory state in dictating socially desirable goals to be achieved through nudges by steering consumers towards these goals will go well beyond any libertarian idea regarding the role of state and its supposed impact on citizens’ autonomy. When theorizing about the question of legitimacy of nudging policies, reflecting the normative foundations of choice architecture will foster the discussion between proponents of opponents of behavioral regulations envisioned in “Nudge”. So far, the idea of choice architecture has its origins in the empirical evidence on the anomalies of classic economic or narrow (as described by Karl-Dieter Opp (Opp 1999)) rational choice theory, where this narrow version is derived from the assumptions about the representative agent described by the homo oeconomicus and the calculus of decision is tied to expected utility theory. What often is overlooked is that the normative prerequisite for comparing different states of welfare is the so called revealed preference axiom: Observed choice reflects optimal behavior as if the decision was made by maximizing potential outcomes given a set of preference, given (full) information and exogenous constraints. Obviously, Thaler & Sunstein are critical about this prerequisite, stating that the axiom of revealed preferences is wrong most of time: “In our understanding, a policy counts as paternalistic if it is selected with the goal of influencing the choices of affected parties in a way that will make those parties better off ...

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