Problem
The vast majority of our day-to-day decision, including ones involving risk are influenced by biases and learned patterns. These decisions are carried out by System 1 thinking which is quick and error-prone as opposed to System 2.
Background
The Nudge Theory to address flaws in decision-making was popularized by Richard Thaler and Cass Sunstein in 2008. The topic is originally part of the behavioral economics discipline, and has gained popularity in HCI over the years.
Process
Conducted a literature review of nudge research in HCI and in behavioral economics to understand how digital nudges work and their nuances.
Outcome
Five principles that guide nudge design and can help designers create ethical nudges for inherently risky environments like investment platforms. The main goal behind these guidelines was to protect people from the consequences of their own flawed decision-making processes.
TEAM
MY RESPONSIBILITIES
Literature Review
Data Analysis
Article Writing
My nudge design guidelines placed within popular UX design frameworks
How we think
The Dual Process Theory suggests two distinct ways in which we process information. System 2 is slow and deliberate, while System 1 thinking enables fast decisions, and is also prone to error in complex contexts (Kahneman & Tversky), though System 1 led decisions can still be effective in environments requiring speed and efficiency (Gigerenzer).
Dual Process Theory
Why nudge?
Nudges aim to correct behavior in contexts where behavior deviates from rationality. Interventions achieve effectiveness by timing nudges and leveraging known biases and automatic behaviors. Nudges can work subconsciously or be transparent, the prior is more effective, and the latter is deemed more ethical.
Method
My research followed an interdisciplinary narrative review, wherein the main focus was nudges in HCI, and the results were synthesized based on themes that emerged (induction) and by adding some papers from behavioral economics, investment behavior to support and justify interpretations (abduction).
METHOD
Narrative review
TIME PERIOD
2018-2025
ANALYSIS
Inductive & Abductive
JOURNALS
Tokens list image
CONFERNCES
Tokens list image
Explore the Environment
Understanding the process, constraints and its audiences subconscious behavior is important to design the right nudge.
Many users may not be aware of the mistakes they make in critical processes, such as lay investors carrying out excessive short-term trades believing that it would bring more profits. Hence, in user interviews they would mainly speak about how they would like assistance in picking the right stocks.
However, if the researcher does not explore the investments space themselves, they would never find out that short-term trading that most people need help with is considered a suboptimal investment technique, and standard economic theory encourages a long term diversified strategy.
Hence, overreliance on primary research may also lead to incomplete analysis of the context being addressed in terms of design.
Dual Process Theory
Preserve Autonomy
Nudges share some operational similarities with persuasion and deception, if not implemented well. Here's where the role of transparency and nudging mechanisms comes in.
Nudges based on the original theory, require designers to respect the freedom of choice and avoid changing the economic value of choices displayed to a user. For example, picking one option over another for a $10 gift-card is borderline unethical, due to the pull that monetary benefit has on people.
Ideally, nudges should also be transparent transparent and, when possible, encourage individuals to engage in slower, more deliberate thinking. Transparency here refers to users being able to identify and interpret the purpose of a nudge. This may reduce effectiveness, however, nudges aren't employed to achieve the highest efficacy in the first place, since it would turn into paternalism.
METHOD
image displayed 3 choices, one with a cash emoji, labled as bad nudge
nudge transparency with the best one marked as best
Personalize Interventions
Constant visual cues can lead to habituation and annoyance, a finding that is also supported by nudge research in HCI. The nudge displayed in the same place leads to habitual ignorance or even annoyance. Hence, alerts and notifications are not considered nudges, and tailoring is required.
Additionally, in highly personal contexts like investments, every individual has different goals, so a single nudge applied to everyone would likely be ineffective and could even encourage herd behavior, which has various negative effects.
Timing and personalizing nudges based on the individual needs and goals helps sustain behavioral change.
METHOD
Alerts/notifications - not nudges
person icon arrows pointing to income, family, leisure etc (things that influence investment goals)
Avoid Risky Behavior
The connection of this guideline is rather strong with the first one (Explore the Environment). Sometimes nudges intended to do good can sometimes backfire and produce the opposite effect.
Copy-trading is known to induce herd behavior and blind faith in active managers. Generally how it's represented takes it up a notch by displaying available active managers in a leaderboard style list encouraging herd behavior among convenience-seeking investors, potentially leading to abnormal stock market values.
METHOD
linkedin herding image
image of copytrading platform example
Test Interventions
Existing nudge research in HCI mainly focuses on quantifying the effectiveness of interventions, but rarely measures ethical aspects. This is despite clear guidelines emphasizing transparency. Future research should record how easily a nudge can be identified and interpreted and build upon this set of guidelines.
METHOD
Insight box - to guage transparency, probe identification and interpretation as a separate question in usability study
Discussion
This research does not claim the guidelines to be a proven way of designing nudges, but aims to spark the idea of context-based nudge design.
The paper also does not pose nudges as a solution to manifestations of behavioral irrationalities in digital platforms.
Existing literature lacks acknowledgement of the nuances surrounding nudges.
Nudges are not a one size fits all solution, hence a nudge framework also faces the same problem. Every special context might demand an additional layer in terms of design approach.
In some cases, we might be focusing on the wrong aspect altogether, maybe some problems like short attention spans, ignorance, reluctance to put in effort, etc, need to be solved elsewhere in peoples lives and not within a product.
The contradiction of wanting a nudge to be effective, yet not aiming for 100% efficacy, since low efficacy means preservation of autonomy is problematic.
Ethical nudge design is a slow process that many solution providers might not want to embed in their design process.
Based on existing literature, one must tread this ground carefully while ensuring transparency with respect to the nudge along with adhering to the above mentioned guidelines to design effective and ethical nudges.
Key Learnings
Don't select a research question that is too broad and purely based on what you think is right, instead read review papers of the sub-discipline you want to target and find gaps in academic contributions.
Learn about advanced statistics before designing your study, since the study design including variables used, sample size, type of data and expected resulted work together in determining the type of test needed for data analysis.
Don't underestimate responsibility in academic research, integrity is above all.
More the merrier, a group of researchers will provide better results than a lone researcher.
Ethics approval is necessary before research commencement, and generally goes through some back and forth, hence stay ahead of the research timeline always.
Next Steps
Stay in touch with HCI research regarding interface design.
Learn about how to do a meta-analysis.
Learn and practice quantitative research processes not only for academic research but applied UX research as well.
Find a high impact research question to turn that into a potential PhD research opportunity.