Richard H. Thaler takes to the pages of the New York Times to discuss how nudges--changes designed to affect behavior--can be beneficial for a company, though they can also do a lot of damage if used unwisely.

What's nudging, exactly? Think of a news website that sends an e-mail teasing its headlines, and then when you click the link, it asks you to subscribe before you can read the article. Another word for the negative version of this is "phishing."

But Thaler, who literally wrote the book on nudging, has three basic principles: nudges should be transparent, easy to opt-out of, and ultimately benefit the user.

Whenever I’m asked to autograph a copy of “Nudge,” the book I wrote with Cass Sunstein, the Harvard law professor, I sign it, “Nudge for good.” Unfortunately, that is meant as a plea, not an expectation. 

Many companies are nudging purely for their own profit and not in customers’ best interests. In a recent column in The New York Times, Robert Shiller called such behavior “phishing.” Mr. Shiller and George Akerlof, both Nobel-winning economists, have written a book on the subject, “Phishing for Phools.”

Read more >