ix) More Thoughts on Thinking (cont.) Nudging

Nudging is linked with cognitive bias

Nudging is based on the propensity for people to make irrational decisions. Generally people make these types of poor decisions when they have incomplete information; this allows cognitive biases to dominate and allow our belief system to get in the way. The belief system can refer to a situation where decisions are made in the self-interest of a group or individuals to the detriment of the rest of the community. 

Definition of nudging 

Using positive reinforcement and indirect suggestions as a way to influence behaviour and decision-making of groups or individuals 

Comments on Nudging 

It has been found that nudging alters people's behaviours in a more predictable way when compared to other ways to achieve compliance, such as education, legislation, punishment, enforcement, etc 

"...Idea of nudging, which is that you just have to give people nudges so they don't make mistakes..." 

Peter Bossaerts as Tony Boyd, 2018 

In fact you need to go beyond nudging people, ie 

"... So it's not enough to be aware of it. It's not enough to be nudging people to do that. In fact you have to coach them, you have to then train them..." 

Peter Bossaerts as quoted by Tony Boyd, 2018 

As these cognitive biases have a biological basis, this needs to be recognised in any training. For example, exploiting theory of mind (ability to form correct beliefs of others intentions by abstracting from one's own situation). This exploits a human skill that facilitates transfer away from instinct. For example, in financial markets there is a cognitive bias which shows a tendency to sell shares that have risen in price and keep those that have dropped in value. The correct investment approach requires forward thinking while ignoring personal history, especially the purchase price of assets. Humans do have the skill to abstract from their circumstances. Thus financial decision-making training schemes need to be based on

"...Bio-centric analysis of human behaviour which opens a promising research avenue associated with designing and testing theory of mind based training strategies..." to reduce impact of cognitive bias 

Petko Kalev as quoted by Tony Boyd, 2018