Name the bias without assuming every person responds the same way.
Governments may use knowledge of cognitive biases to influence decisions through how choices or information are presented. Salience makes a feature more noticeable; loss aversion can make a loss feel more important than an equivalent gain; sunk-cost fallacy gives excessive weight to an irrecoverable past expense. A nudge may change behaviour while leaving the available choices in place. Test whether it improves the stated outcome rather than treating influence as proof of benefit.
- Nudge
- A nudge changes how choices or information are presented while leaving the options available. It differs from a tax that changes a payment or a ban that removes an option.
- Salience and loss aversion
- Salience concerns what people notice. Loss aversion can make losing something relative to a reference point, such as what a person has now, weigh more than an equally sized gain.
- Sunk-cost fallacy
- A sunk cost is a past payment that cannot be recovered. Letting that unchanged payment justify a new choice can distract from the relevant future benefits and costs.
Three different biases
Sunk-cost fallacy
Continuing only because of an irrecoverable past payment ignores the relevant future benefits and costs. A refundable payment is not sunk in the same way.
Loss aversion
An equivalent loss can weigh more heavily than a gain. A change in framing can affect choices without changing the monetary payoff.
Salience
People may focus on prominent features and overlook less noticeable ones. Making relevant operating costs prominent can improve the information considered.
Evaluation
Check understanding, consent where relevant, different people's responses and actual outcomes. Leaving choices formally available does not prove the design benefits every user.
Worked example: The same options, presented differently
A council wants residents to use an energy comparison tool. It can change the display and wording without changing prices or removing options.
- Showing annual cost beside each option makes an otherwise overlooked cost salient.
- Framing the same expected saving as money that would otherwise be lost may engage loss aversion; the underlying payoff should remain the same.
- A decision prompt can remind someone that an old, non-refundable equipment payment is already incurred: compare future costs and benefits when choosing whether to continue.
- Measure comprehension and actual decisions. A more noticeable message could mislead if it hides important costs or creates an inappropriate comparison.
Watch out for this
Any government policy that changes behaviour is a nudge.
A tax changes a financial incentive; a ban removes an option. Identify the specific presentation or decision process in a nudge.
Check your understanding
A prominent label makes running costs easier to notice without changing them. Which mechanism is most direct?
- Salience.
- A per-unit subsidy.
- A ban on the expensive option.