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Optimising nudges and boosts for financial decisions under uncertainty

Published version
Peer-reviewed

Type

Article

Change log

Authors

Franklin, M 
Folke, T 

Abstract

Behavioural interventions that directly influence decision-making are increasingly popular policy tools. Two prominent interventions used are nudges, which promote an optimal choice without restricting options, and boosts, which promote individual capabilities to make more informed choices. Direct comparison is a critical step toward understanding the populations and contexts where they may be most efficient, or potentially complementary toward improving their effectiveness. Two trials in the US and Serbia (N=1,423) tested a series of choices under uncertainty using both nudge and boost interventions. In a replication setting, hypothetical and consequential decisions are used. Findings indicate that disclosure nudges and boosts, unlike social nudges, promote more advantageous financial decisions. Furthermore, the effects of disclosure nudges and boosts generally differ depending on loss and gain framing – boosts promoted more advantageous decisions under gain frames while disclosure nudges did so under loss frames. Finally, boosts were typically more effective for those who initially made suboptimal choices and sociodemographic factors did not mediate the effectiveness of the interventions. These insights provide clarity to highly nuanced, complex patterns across population behaviours in the context of financial choice under uncertainty and considerable implications for the design of interventions for policies that impact population behaviours.

Description

Keywords

3502 Banking, Finance and Investment, 42 Health Sciences, 35 Commerce, Management, Tourism and Services

Journal Title

Palgrave Communications

Conference Name

Journal ISSN

2662-9992
2055-1045

Volume Title

5

Publisher

Palgrave
Sponsorship
Economic and Social Research Council (ES/P010962/1)
This study was funded in part by the Economic and Social Research Council, Global Challenges Research Fund (ES/P010962/1) within the R4HC-MENA project. Some support was also provided by Sidney Sussex College, Cambridge.