Nudge

nudge

The Holberg Prize is awarded annually to a scholar who has made outstanding contributions to research in the arts and humanities, social science, law or , either in one of these fields or through interdisciplinary work. theology In 2018, the Holberg Prize was to Harvard University Professor Cass Sunstein, who is an amazing source of inspiration. I had a great privilege to take Prof. Sunstein’s classes at HLS and have been a great deal from him since then. It appears to me that that Holberg Prize was awarded to Prof. Sunsteins work which he laid in two of his recent books: and . awarded learning Nudge Valuing Life: Humanizing the Regulatory State With Prof. Sunstein after his presentation of “Valuing Life” at HLS Library (2015) During the Holber Prize award ceremony, President Obama sent a greeting message to his previous advisor and teammate. President Obama appointed Prof. Sunstein to lead Office of Information and Regulatory Affairs (OIRA)— an agency which played a key role in applying theories of Nudging in public regulation. President’s message nicely summarizes Prof. Sunstein’s achievements and accomplishments. Here it goes: Members, of the Royal Family, Representatives of the Norwegian Government, distinguished guests, thank you for honoring my dear friend Cass Sunstein with the Holberg Prize and for offering me this opportunity to congratulate him. I have known Cass since we were both professors at the University of Chicago where he was renowned for his staggering body of academic work and for the staggering mess in his office. :) It is true, his was the most chaotic office on campus by a comfortable margin. When he first started courting [his current wife] Samantha, I had to warn her about the fact that he was not very neat. But to be fair, who has time to be organized when you have got so much going on in your head? A reporter once described Cass’ cerebral complexity in this way: “when other academics talk about his mind, they do so in the way people talk about the ballet. There is something precious that ought to be preserved.” How true that is of someone who has influenced the way we think about our constitution and the rule of law, risk and financial markets, health and climate change, free speech and democracy. In fact, Case may have covered all that ground in just one of his nearly fifty books. I am sure, much has been said already about the prolific nature of his work, from his hundreds of scholarly papers, to his purge of the most cited legal scholar of the world. Less noted, as important a metric, I think, is the staggering breath of collaborators he has brought along on his intellectual journey. The shared number of his partnerships actually gave rise to “six degrees of Cass Sunstein” making him the Kevin Bacon of legal scholarship with academics clambering to shrink their Sunstein number to one. What a testament it is to Cass’s joyful inclusive spirit, to his capacity to make his scholarly research not stodgy, but accessible, not staid, but enjoyable. I have never had the privilege to co-author a paper with Cass, but I did want to do more work with him. So once I was elected the President of the United States, I tried to pry him every time and put his propositions in to practice at the White House. In the US, when some ambitious academic has an inkling that he will be offered some high position in the government someday, they tend to play a little safe with the research. But not Cass. He has never censored himself for political reasons. He has always been fearless in the pursuit what is true. How do we polarize ourselves? How should we change the calculus of climate change? That animal have rights. What is the proper hierarchy of the Star Warms films? (That last one really did bring out the critics!) :) But in Cass I saw someone who viewed our Constitution as I do: A living and breathing document. Somebody who viewed our democracy — our precious system of self-government — as the way in which each new generation strives to push ourselves closer to those lofty ideals. I saw Cass as someone who had faith not in what government could do, but what we as the stewards of self-government can do together. We share the desire to bring the government into the 21st century, to make it more relevant to the way we live our lives today. Neither of us believed in regulation for regulation’s sake, or for pure efficiency sake, but as modest way to protect people’s choices, promote better lives and to improve our society. What if we could encourage people to live healthier or save for retirement without regulation that they do so? And so together we introduced for the first time the concept of Dignity into cold-hearted cross-benefit analysis. What if we considered more than the cost of insuring accessibility to public spaces, but introduced a variable that measures someone’s ability to turn the wheelchair in the bathroom stall? I trusted Cass to know my sense on what the right balance was on important issues. And he delivered with policies that saved significant money and untold lives, policies that delivered benefits far surpassing both the costs and benefits secured by other administrations. Cass even secured praise from my political critics — and that is no small feat here in Washington. It speaks to the way Cass treats others: with decency, respect, curiosity, and an open mind. He is someone who is always open to be proven being wrong as long as it is well argued, as long the other person is also listening. I’ve spoken long enough that Cass has already published another book by now. So I close by saying this: Cass, what a well-deserved honor this is! What a tribute to an entire body of work and the thread that runs through it: A commitment to the principles of liberty, equality, dignity, and how we might constrain ourselves while promoting and protecting those principles. A commitment to making ourselves bit by bit better than we are. It is an honor to call you a friend, not only because you are a towering intellect, but more importantly, because you are a good man. Congratulations to you, and to Samantha, and your children, who I know are bursting with pride for you. Love you.

President Obama’s Greeting to the 2018 Holdberg Prize winner Prof. Cass Sunstein

The 2017 Nobel Prize in economics was awarded to Richard Thaler, an economist who introduced a more realistic understanding of human behavior into the science of economics and to improve public policy and regulation by taking into account human behavior. American Richard Thaler, now 72, is a professor at the University of Chicago. He is known as the father of — a field of research combining the knowledge about human behavior in explaining the economics of behind the decision making. behavioral economics The Nobel Prize Committee noted that in his research R. Thaler managed to show how various human traits systematically affect individual decisions and market outcomes. This Prize shows how greatly R. Thaler contributed to bringing the importance of emotional and rational aspects to the decision-making, laying foundations for shaping public policy and government more efficient. Recognizing Thaler’s work with the Nobel prize should be seen as a tribute to the significance of people working in the area of behavioral economics. In fact, R. Thaler is not the first behavioral economist who received this recognition: in 2002, Prof. Kahneman was the first behavioralist who was awarded the Nobel prize, and Schiller followed in 2006. However, while previous behavioral economists laid theoretical foundations, it was R. Thaler who did most of the organizational work to make sure that behavioral economics achieve this broad recognition and public respect. R. Thaler worked so that students studying behavioral aspects of decision making could receive scholarships for Ph.D. studies, and that this field of research could lay the foundations to establish institutions that would lead towards the improvement of peoples lives. In other words, R. Thaler did not aim to destroy traditional economics, but, rather, he wanted to draw more attention to the weird ways how people think. “In order to do good economics, you have to keep in mind that people are human.” (R. Thaler) Here are those 3 ideas developed by Richard Thaler, that change the way we think and behave: bounded rationality, lack of self-control and nudges. 1. Bounded rationality At the time when R. Thaler started his work as a phd student at Case Western Reserve University, the mainstream economic theory was largely based on the assumption that people behave rationally. Richard Thaler began challenging this idea and in many resulted studies showed that humans behave irrationally. When economics started to be highly mathematical in 1950s, rational models were the models which people could solve, it was where the light was. Trying to put in all the complexities of emotions, lack of willpower and salience makes these models a lot messier. The economists like things to be neat and tidy. And, of course, the world isn’t that neat and tidy. (R. Thaler) In his numerous publications, Thaler offered many examples showing that human irrational behavior is systematic. Moreover, Thaler suggested irrational behavior can be anticipated and controlled. Thaler developed a notion of “mental accounting” which means that in making decisions humans tend to simplify things. In other words, people give more emphasis to separate decisions rather than seeing them in broader context. E.g., in personal finances people tend to make budgets for daily expenses, rent and vacation which oftentimes leads to extra cost rather than helping to build on long-term savings. Similarly, taxi drivers tend to set daily targets for driving income (this often means that drivers finish earlier when the demand is high, and drive longer when the demand is low). In addition, Thaler introduced the notion of “endowment effect” which focuses on how people tend to deal with positive and negative feelings. When it comes to ownership, people tend to place greater value on their own ownership. This leads to the situation where people are less willing to give away the possessions they have (loss-aversion). This helped R. Thaler make a more broader observation how people behave in making purchase and sale decisions. For example, investors are holding on to depreciating shares hoping that the situation will be better; and rushing to sell valuable shares willing to recoup profit. 2. Lack of self control According to Thaler, people suffer from various mental illusions that cause people to make blunders. The classical example is could be described as the dilemma of Odysseus’ which permeates every single aspect of our life: we are tempted to dive into the pleasures of consumption here and now rather than saving for more exciting experiences (or rent) in the . future The classical example is could be described as the dilemma of Odysseus’ which permeates every single aspect of our life: we are tempted to dive into the pleasures of consumption here and now rather than saving for more exciting experiences (or rent) in the future. R. Thaler showed that experiences that are close in time take up more of our awareness than those that are further off; hence spending $100 now seems to bring more value now than saving it for the future. Thus, R. Thaler devised “planner-doer” model where the planner-self thinks about long term objectives, where as the “doing-self” cares about what is here and now. Due to the lack of self control, people are more willing to become adhere to various pre-commitment strategies such as, diet or non-smoking plans, AA, drug abuse centers, etc. 3. Nudges Thaler’s research opened the gates to great number of provocative findings. He showed that people are willing to penalize unfair behavior even if such penalty does not benefit them (or even if they have to pay for that); or that people choose not to make choices because they are afraid of the consequence. Various real-world findings inspired R. Thaler to venture into an exploration about possible improvements in human decision making. He started to investigate how public agencies and institutions could assist humans in making more rational and informed decisions. This led R. Thaler to propose that governments should utilize various tools which governments could use to alert, remind, or mildly warn their citizens. The intrinsic idea of nudge is to help people make good decisions without coercing them to make any particular choice. nudges — My main goal in the book Nudge was to help people understand how we can deal with highly complex things like mortgages. (R. Thaler) I was introduced to the notion of nudge by Cass Sunstein —together with R. Thaler he co-authored a book with . While I was studying at the HLS, I took two classes taught by Prof. Sunstein: Administrative Law and Inside Government. In those classes, Sunstein constantly asked questions on possible improvement of government policies based on various findings about irrational human behavior and finding ways to improve efficiency and quality of public services. the same title In particular, Thaler and Sunstein argue that nudges is the best form of libertarian paternalism. Some nudges are relatively simple: adding a photo on the speed ticket increases the fine payment rate because traffic violators are more willing to pay the fine if they see a photo of their car attached to the bill. Other forms of nudges could have wide-ranging ramifications. For instance, Thaler developed the idea of “ ” which refers to a situation where employees are asked if they prefer some portion of their future wage increases to be devoted to retirement savings. This is based on the findings of psychologists which show that (i) people are quite reluctant to lose access to current earnings, but (ii) are less concerned about future savings. Save More Tomorrow So if you currently have a job and are automatically enrolled in retirement savings plan, you say thanks to R. Thaler and his work. R. Thaler and C. Sunstein developed a further insights about the role of nudges and default rules (e.g., automatic enrollment into donor list upon signing up for a driver’s license, or various nudges in terms making information accessible to citizens). Thaler’s Invaluable Contribution to Development German physics scientist Max Planck once said that “science progresses funeral by funeral”. Does it mean that behavioral economics mark the death of contemporary models based on cost & benefit analysis and rational choice models? Certainly not. Image by Anne Ryan/University of Chicago, via Reuters Thaler’s contribution the development of economic theory and bringing real-word findings about human behavior has been monumental. Behavioral economics has become a widely-acknowledged line of thought in economics and has spurred various initiatives to make governments around the more efficient. In fact there is an increasing number of countries where behavioral scientists are invited to the table with policy makers. In the UK, for example, a special government agency was established with a task to make the government more efficient based on the findings on human behavior. The Organization for Economic Cooperation and Development (OECD) released already two reports with multiple exemplary cases from various countries on the application of behavioral insights in public government. There is no doubt that the role of behavioral studies and their application will greatly increase in the future. Asked how he would spend the Nobel Prize money, Thaler replied: Together with other notable economists such as D. Kahneman, A. Tversky and Cass Sunstein, Thaler is one of those public thinkers whose work makes us positively look forward to the future. “This is quite a funny question. … I will try to spend it as irrationally as possible.” 👏 Thank you for reading this post! If you liked it, click and hold the on your left side, or leave a comment. I publish a a new story every week. Follow me and you won’t miss my latest insights on innovation, creativity, and the recent trends in Silicon Valley and beyond.

3 ideas of Richard Thaler that changed the way we think

I studied 12 successful SaaS products (including Beehiiv, Canva, and Buffer) to understand the tactics they use to nudge their users towards a paid plan. You can find my entire feature gating research deck (for free) here. Here are 4 tactics you can steal right now. Display the user's progress at all times Does your product offer a limited number of actions for free? Display your user's progress towards the upgrade at all times. Here's an example with Todoist: Todoist offer up to 5 free 'Projects'. Beyond that, the user has to upgrade to a paid plan. Todoist do an excellent job of displaying the limit at all times; so there are no surprises when it's time to upgrade. Turn your feature gate into a landing page As users click around your app and reach a paywall, use this opportunity to sell the feature (and, thus, the upgrade). Here's an example with Beehiiv: Beehiiv show entire marketing landing pages inside their app. This isn't just a 'Please upgrade to access this feature' paywall. They take this opportunity to remind the user of the tremendous value they'll get out of upgrading by actively selling the feature. Leverage consistent visual clues Most products gate multiple valuable features behind an upgrade. As users navigate the app, warn them of the required upgrade with consistent visual clues. Here's a good example with Buffer: These visual clues achieve multiple goals. First, they are a constant reminder that the user is not getting as much from your app as they could. Second, it limits disappointment: you won't have access to this feature. Hook & anchor value throughout the upgrade process What extra value will your users get on the other side of the paywall? In this example, Grammarly not only clearly display the value (hook) but keep the user engaged throughout the upgrade process by reminding them of the value (anchor): At each step of the process, the user is encouraged to carry on so they get to that sweet, sweet value. Grab the entire feature gating research deck (30+ pages). I studied 12 successful SaaS products (including Beehiiv, Canva, and Buffer) to understand the tactics they use to nudge their users towards a paid plan. You can find my entire feature gating research deck (for free) here . feature gating research deck (for free) here Here are 4 tactics you can steal right now. Display the user's progress at all times Does your product offer a limited number of actions for free? Display your user's progress towards the upgrade at all times. Here's an example with Todoist : Todoist Todoist offer up to 5 free 'Projects'. Beyond that, the user has to upgrade to a paid plan. Todoist do an excellent job of displaying the limit at all times; so there are no surprises when it's time to upgrade. Turn your feature gate into a landing page As users click around your app and reach a paywall, use this opportunity to sell the feature (and, thus, the upgrade). Here's an example with Beehiiv : Beehiiv Beehiiv show entire marketing landing pages inside their app. This isn't just a 'Please upgrade to access this feature' paywall. They take this opportunity to remind the user of the tremendous value they'll get out of upgrading by actively selling the feature. selling Leverage consistent visual clues Most products gate multiple valuable features behind an upgrade. As users navigate the app, warn them of the required upgrade with consistent visual clues. Here's a good example with Buffer : Buffer These visual clues achieve multiple goals. First, they are a constant reminder that the user is not getting as much from your app as they could. Second, it limits disappointment: you won't have access to this feature. Hook & anchor value throughout the upgrade process What extra value will your users get on the other side of the paywall? In this example, Grammarly not only clearly display the value (hook) but keep the user engaged throughout the upgrade process by reminding them of the value (anchor): Grammarly At each step of the process, the user is encouraged to carry on so they get to that sweet, sweet value. Grab the entire feature gating research deck (30+ pages). Grab the entire feature gating research deck (30+ pages).

4 Tactics SaaS Products Use to Nudge Users to Upgrade

4টি কৌশল SaaS পণ্য ব্যবহারকারীদের আপগ্রেড করার জন্য ব্যবহার করে

4 Taktiken, mit denen SaaS-Produkte Benutzer zum Upgrade bewegen

4 tácticas que utilizan los productos SaaS para animar a los usuarios a actualizarse

4 tactiques utilisées par les produits SaaS pour inciter les utilisateurs à effectuer une mise à niveau

4 तरकीबें जो SaaS उत्पाद उपयोगकर्ताओं को अपग्रेड करने के लिए प्रेरित करते हैं

SaaS 製品がユーザーにアップグレードを促すために使用する 4 つの戦術

사용자가 업그레이드하도록 유도하는 SaaS 제품의 4가지 전술

4 táticas que os produtos SaaS usam para estimular os usuários a atualizar

4 тактики использования SaaS-продуктов, чтобы подтолкнуть пользователей к обновлению

Kullanıcıları Yükseltmeye Yönlendirmek İçin SaaS Ürünlerinin Kullanıldığı 4 Taktik

4 chiến thuật mà sản phẩm SaaS sử dụng để thúc đẩy người dùng nâng cấp

SaaS 产品用于推动用户升级的 4 种策略

In this article, I’ll go over the 6 most common types of nudges, provide examples and give the latest nudging best practices so you can apply them to your SME or B2B marketing. Nowadays everyone's been getting nudged. Whether it’s a free trial, subscribing to an email list, or accepting cookies to a website you don’t expect to again, we’re bombarded by them. You don’t want to miss out on this, do you? I didn’t think so! (nudge, nudge) So let’s jump in. What Is Nudge Theory? There’s been a lot of talks recently about Nudge Theory and strategy in online marketing and customer-engagement circles. So what, exactly, are nudges? We define nudges as an intervention in choice architecture that causes a person to behave in a desired way or to choose a preferred option over alternatives. How can nudges help your business? Improving customer experience. Increasing conversion rates. Gaining accurate customer feedback. Reducing buyer remorse and costly customer returns. Upselling products and services by breaking through natural buyer resistance. Increasing open rates and reducing churn from email marketing campaigns. Increasing the potency of your social media campaigns by using social-proof to increase the efficacy of call-to-actions Growing sales revenues by understanding how choice architecture directly affects KPI outcomes. How do nudges work? Nudges work by taking advantage of our mental shortcuts (AKA heuristics). Here are the most successful mainstream categories of nudges designers are using in choice architecture right now: Strategic use of default options Pre-commitment nudge Social norms nudging Loss-aversion framing Gamification Precision engagement nudges https://www.youtube.com/watch?v=bNrV67WAW3M?embedable=true Strategic Use of Default Options People are more likely to choose the default options than to modify them. But if you make people have to think about it, you are more likely to get a “no”. Strategic default business tips If you want a customer to take one option over others, make the preferred choice a default! 2. If cancellation rates for your product or service are high, consider nudging the customers to start at a lower tier as to reduce the potential for cognitive dissonance. This will help to familiarize themselves better with your solution without feeling pressured by time, cost, and your refund or warranty window. Pre-Commitment Nudge Getting a person to take a position or make a commitment to do something greatly increases the chances they will follow through on it. If we know what our customers’ top priorities are, and know our product or solution solves them, getting them to confirm acts as a micro-commitment that can start an agreement momentum. Pre-commitment business tips Ask your customer what their top priority is, and how committed they are to finding a solution. 2. State your call-to-actions in the first person. Switching to first person signals a shift in the conversation.” Ex: “start your free trial” vs “Start my free trial”. Social Norms Nudging Humans originated from pack animals -- we’re hardwired to be social and take social cues from others. Because of this ancient hardwiring, we’re more likely to do something if we believe that’s what others are doing (especially our colleagues, peer groups, and personal networks). Social norms business tips Include customer reviews on your product and landing pages as well as social media metrics when applicable. On Thank You pages, place your relevant customer testimonials visibly near the top. This will help to reduce cognitive dissonance associated with buyers’ remorse and second-guessing themselves that they made the right decision buying or requesting to speak with a salesperson. Loss-Aversion Framing People value what they currently possess more than what they don’t yet own. We’re more motivated by potential losses than potential gains. For example, a majority of people will exert more effort to prevent the loss of $10,000 than to acquire $10,000 because the satisfaction lost is more overpowering than the with the same amount. satisfaction gained Loss-aversion framing business tips Get customers on a free trial or money-back guarantee so they can experience how well your product works. They won’t want to revert if you gave them the desired results. Experiment and A/B test by expressing gains made from your product or service in the negative to exacerbate a pain point they’re having. X improves business efficiencies = Stop needlessly wasting time and money on Y Example: Gamification Adding game-playing elements such as scoring, competitions, changing difficulty levels, and random rewards lets you encourage higher engagement levels for a service, product, or policy. Gamification becomes more effective when it can be brandished among target peer groups and carries a sense of prestige or authority. The more social and shareable, the more effective your gamification strategies will be. Gamification business tip Create reward systems, run digital contests, acknowledge customers or users with high engagement, and periodically throw in surprise bonuses and gifts. Give leads/customers something tangible or intangible that increases their sense of prestige. A credential, certification, token, or another visible signal that shows one has attained increased status or prestige. Tangible Example: Novel ideas or valuable concepts that solve an immediate problem that their peer group experiences. Intangible Example: Precision Engagement Strategies Semi-customized nudges are delivered to precise, well-defined groups, and often at the best possible time. Precision engagement business tip Make your marketing automation system messages more granular with customer types, rather than sending the same message to your different buyer persona groups. Precision engagement nudges can also be influenced by actions your prospect takes reading an email or visiting your website, or timed to calendar events like Christmas shopping for eCommerce businesses. Nudging Best-Practices For Businesses: Conclusion Nudges have become both pervasive and highly invisible for most people. Businesses use nudge architecture to improve customer experience and lower attrition, gain valuable feedback, improve conversion rates and improve their bottom lines. Why leave your customer’s choice of architecture up to chance? Apply Nudge Theory choice architecture to your business today!

Nudge Theory Best-Practices For Business (With Examples) 

Shares in social networking giant Facebook dropped by a staggering 24% overnight after the revelation that huge numbers of users are using a Chrome extension called . deleting their News Feeds Nudge The Chrome extension, which lets users get rid of the highly-addictive News Feed across all platforms while retaining the useful parts of Facebook, dramatically reduces the amount of advertising revenue that Facebook can make off its users, since they no longer see targeted adverts — or indeed anything at all — on their Facebook home page. It’s thought that thousands of Facebook users are flocking to the Delete Your News Feed feature in order to of how they use the social network. Analysts have been scrambling to redo their financial models for a world where users do not endlessly scroll down pointless content that they don’t actually enjoy consuming. take back control Nudge also changes Facebook’s trademark blue bar into grey to make the site less appealing, and hides sidebars designed to keep users addicted, along with a host of . features designed to decrease internet addiction in general Desperate offers by Mark Zuckerberg to buy out Nudge for up to $1bn have been repeatedly ignored by Nudge’s CEO and founder, Louis Barclay. “Mark who?” said Barclay when contacted this morning by reporters. “ ,” he added. You can download Nudge here

Nudge causes Facebook shares to drop by more than 20%

As GDPR settles upon our industry, it’s a good time to reflect on how we got here. How did we end up with top-down, government-enforced data management and retention policies? In large part, it’s a way to solve a collective action problem for the global community of users who suffer from privacy fatigue. Everyone knows their data is floating around in the ether, bought and sold without so much as a nod to the “owner” of the digital identity. But the fact is that individuals don’t have the power to force change in the face of companies that serve billions of users. More important, most users overwhelmingly love the convenience and capabilities of these globe-spanning social media services. As a result, frustrated users have just given up fighting for control over their digital identity. Privacy Fatigue is Making You More Vulnerable as a “nearly constant state of weariness … impact[ing] your emotional and psychological well-being.” The Mayo Clinic defines “fatigue” Now apply this lethargic condition to the realization that your private data is not in your control and is no longer private. Faced with this gloomy realization, it is easy to understand the concept of “privacy fatigue”. Privacy fatigue has been discussed in academic circles for at least a decade, with some researchers believing that it’s a natural reaction to a world where identity data is vulnerable and subject to institutional indifference. Until recently, privacy fatigue was only a hypothesis, but a recent study indicates the condition is real. Three researchers from South Korea’s National Institute of Science and Technology studied the habits of 324 online users and determined privacy fatigue is genuine and, worse, it creates a sense of futility that puts identity data at even greater risk. Feeling the “Futility of Privacy” In researching 2017’s “ ”, Hanbyul Choi, Jonghwa Park and Yoonhyuk Jung determined privacy fatigue is the outcome of a complicated chain of events. The Role of Privacy Fatigue in Online Privacy Behavior First, people are faced with the challenge of managing personal data in an environment crowded with privacy threats and never-ending data breaches. Against this backdrop, consumers feel they have no control over their identities, triggering a “sense of futility” in expecting online privacy. This futility breeds cynicism, which in turn, the professors conclude, result in a self-fulling prophecy where online users make little effort to protect their credentials. As a result, they are further victimized by both hackers and faceless companies selling their personal data. This is not entirely news. In fact, the 2017 study cites research from 2010 where mobile phone users wrestled with the excitement of having digital coupons sent directly to their devices, while simultaneously admitting they found the practice “intrusive.” Since 2010, this unease has only amplified, say Choi, Park and Jung. They believe news of never-ending, high-profile data breaches have bolstered privacy fatigue. They specifically point to the devastating Yahoo data breach in 2013, which impacted 1 billion users, as a key turning point. The 2013 breach, they say, it left many users believing they were simply “not in control of their online information”. The professors quote from a separate study that followed the Yahoo incident, which concluded: “People feel as though they have no control over personal information, ultimately [driving] them into a state of resignation about online privacy.” Since then, they write, this sense of helplessness has only grown, resulting in “emotional exhaustion and cynicism” amongst consumers. This state of mind has created the current environment where “users … are not willing to devote major efforts to managing the information they share.” In fact, the researchers conclude: “ .” People with high levels of privacy fatigue are more likely to ‘do nothing’ in response to the misuse of their personal information In short, people have simply acquiesced to the notion that their identities are no longer their own. Facebook Deja Vu All Over Again In 2009, when it was discovered the company was sharing private user data. At the time, the social media giant promised new, complex privacy features to help users protect their identities. ( .) Facebook found itself on the defensive This may sound familiar This prompted Mark J. Keith and Courtenay M. Evans, Brigham Young University; Paul Benjamin Lowry, City University of Hong Kong; and Jeffry S. Babb, of West Texas A&M University, to complete a 2104 examining “feature fatigue” a condition, they determined, that discouraged users from protecting their identity credentials. Privacy fatigue: The effect of privacy control complexity on consumer electronic information disclosure , Although Facebook’s new security features promised to better protect user identity, the study found the features had the opposite effect. “When Facebook introduced new privacy settings in 2009, the Electronic Frontier Foundation (EFF) accused the social media site of pushing users to disclose more information … than ever before,” the authors wrote. “However, little research indicates that such practices are effective …” Instead, researchers found, the more complex the privacy controls, the greater “the tendency of consumers to disclose greater information over time.” (The EFF reached , stating “[the] changes will lead to Facebook users publishing to the world much more information about themselves than they ever intended.”) a similar conclusion in 2009 Whether it is feature fatigue or privacy fatigue, the fact remains that our identity information is more vulnerable now than it was in 2009 and, as users, we are becoming less and less inclined to try to protect it. GDPR: A nudge towards “Self-Sovereign Identity” GDPR serves a useful purpose. It provides a regulatory nudge in the right direction — towards what our industry calls blockchain-based “ .” . As is often the case, we need an impetus or a forcing function to kickstart the industry in the right direction. Necessity is the mother of invention, after all. self-sovereign identity Users can’t solve the problem of privacy fatigue alone Blockchain-based identity solutions can help users overcome their privacy fatigue by giving them an easy, convenient toolbox to manage identity data. Blockchains act as the foundation for a set of tools that can deliver the benefits of cloak-and-dagger cryptography to everyday users — the missing link that allows cryptography to suddenly be used by everyone. Using established cryptography techniques, these new tools allow people to prove things about themselves using decentralized, verifiable credentials just as they do offline. We will dig into how “verified credentials” work in a future post, but for now, the takeaway is that we finally have the tools needed to allow users to reclaim control over their identity data for their future transactions. The timing is uncanny. It’s almost as if blockchain-based identity solutions are being created specifically to provide an easy transition to GDPR compliance. Despite the fact that the top-down regulation of GDPR is diametrically opposed to the decentralized blockchain ethos, what that really means is that you can more reliably and efficiently control your identity data online and real-world. And perhaps, GDPR will start us on the journey that will help us overcome our fatigue and reach privacy nirvana.

GDPR: A Nudge to Solve Privacy Fatigue?

Default choices, irrational human beings and lessons for building products. The Nudge. Image courtesy: http://www.ellisjones.com.au/ I’ve been reading a lot of behavioral economics books lately. I came across Richard Thaler’s book — ‘ ’ when I was reading Daniel Kahneman’s Thinking Fast and Slow. Nudge was a natural progression from Kahneman’s book. Nudge — Improving decisions about health, wealth and happiness The art of the Nudge is especially relevant to products managers who depend on soft influence to affect decisions. In a team/organization usually, different stakeholders can have different aims. For example the designer wants to optimize for users, the engineer wants to solve for elegance of the solution, the business person wants to optimize for revenue. Building consensus requires a lot of subtle nudges — whether it’s calling a meeting to discuss a design decision or an email listing down the minutes of a meeting or presenting user feedback to emphasize urgency of the problem to the engineer. Thus I was excited to read Thaler’s work. In the book Thaler discuss an idea called ‘libertarian paternalism’ — . For example, a company might, by default, enroll new employees in a 401K plan and put a certain salary percentage into that plan. The employees can opt out or change their contribution amount at any time, but by enrolling everyone by default, the company does an end run around its workers’ natural procrastination tendencies, forcing them into anything. gently, non-coercively pushing people toward doing something that they really want to do without The power of defaults Experience shows that most users don’t bother to change the default settings — whether it’s your WhatsApp background or phone ringtone. Thus designing good default settings is crucial to improving the overall user experience. The iconic WhatsApp background: The iconic Whatsapp background The legendary Nokia ringtone. More info here: http://mobile.softpedia.com/blog/Nokia-s-Famous-Ringtone-Is-Much-Older-Than-You-Think-483226.shtml Another good example of power of default settings is a SIP — systematic investment plan. Surely we’ll be richer if we timed the market, studied stocks and invested in the right ones. However usually we’re too busy or too lazy to spend any meaningful time researching stocks. SIP ensures we’re diligently investing a % of our salary every month thus avoiding extra expenditure & ensuring a compounding return on our investments. Consider MakemyTrip which adds an insurance to your ticket by default. MakeMyTrip adds an insurance to your ticket by default How does one choose the ‘right’ defaults? Does one optimize for the user or business? In some instances the choice is clear, the right choice for a user and business are one and the same — like the Google widget on the home screen. However it isn’t always so clear — consider autoplaying videos on Facebook. Autoplay on Facebook — why oh why? While auto-playing videos help increase video views for Facebook, it consumes precious data for the user. How does one choose between the two? Private products and companies are answerable to their users & the stock market. Free market competition ensures that companies strive to build products optimal for users. Thus if a default choice is detrimental to users it gets panned on the playstore forcing the developer to make changes. However in case of public policy, how does one ensure the default choice is in interest of the citizen? Thaler says that the individual should be nudged towards the choice — something a rational human being or in his language 'econ' would choose. There are 2 variants of such a choice — 1. Helping an individual make a choice that is rationally better for himself 2. Nudging an individual towards a choice that is rationally better for the society but not necessarily for the individual. (Example everyone being an organ donor by default). more rational Consider the example of retirement savings — contributing to your 401k or your PF account in the Indian context. While contributing more to your PF account might be more ‘rational’ choice in the long term, it reduces the amount of money available to people who might need it to send their school to children and to get food. The 2nd variant is more controversial. No framework is presented on when and how to make such a decision between 'good for the society' and 'good for the individual’ cases and how to inform the user about the choices being made. We see that in cases of public policy a nudge turns to a mandatory requirement — example Aadhaar. In conclusion, Richard Thaler makes an important point that we should pay keen attention to default choices as they have a big effect on our product experience/well being. Awareness about Thaler’s work helps us understand the innumerable default choices that the government and other products make for us and how it affects us. However we need to think about frameworks that ensure nudging is used in a constructive way, especially by governments. If you liked my article, please hit the clap button multiple times. At Comic Con, 2 years ago! Hello 👋 : References https://www.forbes.com/sites/washingtonbytes/2017/10/21/when-the-nobel-prize-goes-pop-richard-thaler-and-the-uncertain-future-of-nudge/amp/ — echoes similar thoughts on the pros and cons of the Nudge approach.

Nudge — the pros and cons of Noble prize winner Richard Thaler’s work

is a piece of java code to let you hack your JVM from the browser. nudge4j There are many valid reasons to use it during development, and one, , it’s because it’s fun. for sure But there are others. Reason №1 — A teacher’s tool Use nudge4j as an expression evaluator to explain your son / daughter / friend / colleague how a given class works. Reason №2 — Demo your Java library. Say you have written a Java library or API. Then write a snippet of code in nudge4j to see it in action. Better than that, invite your colleague at your desk and ask him or her to suggest changes and try things out, on the fly. No need to recompile any demo code, simply play from the browser. Reason №3 — Smoke test (a.k.a one more sanity check). Aside from your existing unit tests, regression tests, integration tests, … you can keep to exercise some of the key functionality, maybe before pushing for the final release. a snippet of nudge4j code If it works, great. If it fails, you can hack your way because you are already in the JVM. Reason №4 — It’s even more powerful than you thought If you read 1, 2 and 3 you know that nudge4j can interact with any java object through its public API. But what if you want to get deeper than that ? What if you want to access private fields of an object ? It turns out that with a bit of ‘ ’ you can easily get there. Sometimes you might not need to turn to a debugger after all. reflection Conclusions Here we go, I gave you four reasons to use that I thought of on a tube journey that ended up being longer than usual. nudge4j Let me know if you can think of more. Thanks for reading this.

Four reasons to use nudge4j

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In October 2024, the Consumer Financial Protection Bureau (CFPB) finalized the 1033 rule, officially ushering in Open Banking regulatory framework in the US. Built on Section 1033 of the Dodd-Frank Act, this final rule grants consumers full control over their financial data, giving them the right to share this information with third parties (e.g., fintech startups) of their choice. While Dodd-Frank set the expectation for consumer data rights many years ago, it wasn’t until 2021 that regulators started to take action. Now, with this new rulemaking in place, the US is moving closer to a consumer-centered, fintech-friendly regulatory landscape—one that could lower barriers to entry for newcomers and disrupt the status quo for established financial institutions. Globally, Open Banking has been in motion for years. PSD2 was launched in Europe in 2018, requiring banks to share customer data with 3rd party service providers to foster innovation and competition. The UK’s Open Banking Initiative took things further, mandating that top banks build open APIs to improve data accessibility. The U.S. can now draw from these experiences as it shapes its own Open Banking framework, taking lessons from Europe’s successes and challenges. For fintech startups, the 1033 rule unlocks new opportunities—and presents a few complex questions. Redefining Bank-Fintech Relationships - The final rule mandates that banks share customer data with 3rd party service providers, potentially equalizing the playing field and allowing fintechs to compete more directly with traditional institutions. But along with the opportunities come challenges: fintechs and banks must navigate and negotiate issues like data ownership, tokenization, and robust security standards. As this regulatory shift reshapes bank-fintech dynamics, the industry could see new forms of partnerships emerge—or existing hierarchies overhauled. Lowering Financial Barriers for Startups - Currently, many fintech startups could spend more than $500 per user per month on bank account connectivity, with additional fees for each ID verification or additional services. By calling for specific data-sharing standards, the 1033 rule aims to make accessing financial data less costly and more reliable. Organizations like FDX (Financial Data Exchange) have already mapped out an extensive range of standards that may be used for data-sharing, from tax records to account balances. With this standardization, fintechs could experience fewer financial hurdles, enabling them to allocate resources toward innovation and customer acquisition. Despite the optimism, there are limitations to the immediate impact of the 1033 rule. Data Aggregators Stay in Play - Large data aggregators like Plaid, Finicity, Yodlee, and MX continue to control data flows, maintaining their role as data gatekeepers and charging fees for access. The 1033 rule may reduce costs somewhat, but free access to data remains unlikely. These established data companies might provide more value-added services, similar to providers like Codat and Rutter, focusing more on analytics and integrations rather than simply enabling data connections. For fintechs, access to bank data is just one line item in a budget dominated by customer acquisition and operational expenses. For instance, digital lenders find that data access costs are a small fraction of their overall costs. While Open Banking could improve operational efficiencies, the true impact on expenses depends on broader shifts in how these companies manage marketing, sales, FTEs in underwriting and back offices, etc.. Small Bank Exemptions - Not all U.S. banks fall under the 1033 rule. Banks with less than $850 million in assets are exempt, leaving over 3,000 institutions outside its immediate scope. While large banks hold the lion’s share of deposits and fintech partnerships, smaller banks are critical players in areas like small business lending and community-focused financial services. Without direct regulatory pressure, many smaller banks may still feel peer pressure to modernize as they look to retain customers and diversify their revenue streams. Fintechs aiming to serve niche markets may find opportunities in partnering with these smaller institutions, leveraging joint resources to build API connectivity. Open Banking Isn’t Essential for Every Fintech - The 1033 rule opens the door for Open Banking, but it doesn’t mean every fintech needs to jump in with both feet. Many startups already have access to necessary financial data through other means, whether from platforms like Amazon, Salesforce, or QuickBooks. For some, targeted data tools—such as OCR for document processing—may be more practical and needed than adopting a full Open Banking approach. The value of Open Banking depends largely on a company’s business model, and not every niche fintech will find it necessary. Conclusion: A Step Forward, With Caution The CFPB’s 1033 rule signals an important step toward Open Banking, offering fintechs lower data access costs, easier integrations, and a more level playing field with traditional banks. But this isn’t an open invitation to abandon established relationships or existing systems. Key gatekeepers remain, data costs may not fall as dramatically as some hope, and fintechs will need to consider carefully which aspects of Open Banking will genuinely support their growth. Ultimately, the 1033 rule isn’t a complete game changer, but a nudge forward—a chance for fintechs to reimagine what’s possible within a still-developing Open Banking ecosystem in the U.S. In October 2024, the Consumer Financial Protection Bureau (CFPB) finalized the 1033 rule , officially ushering in Open Banking regulatory framework in the US. Built on Section 1033 of the Dodd-Frank Act , this final rule grants consumers full control over their financial data, giving them the right to share this information with third parties (e.g., fintech startups) of their choice. While Dodd-Frank set the expectation for consumer data rights many years ago, it wasn’t until 2021 that regulators started to take action. Now, with this new rulemaking in place, the US is moving closer to a consumer-centered, fintech-friendly regulatory landscape—one that could lower barriers to entry for newcomers and disrupt the status quo for established financial institutions. 1033 rule Open Banking Section 1033 of the Dodd-Frank Act Globally, Open Banking has been in motion for years. PSD2 was launched in Europe in 2018 , requiring banks to share customer data with 3rd party service providers to foster innovation and competition. The UK’s Open Banking Initiative took things further, mandating that top banks build open APIs to improve data accessibility. The U.S. can now draw from these experiences as it shapes its own Open Banking framework, taking lessons from Europe’s successes and challenges. 2018 Open Banking Initiative For fintech startups, the 1033 rule unlocks new opportunities—and presents a few complex questions. Redefining Bank-Fintech Relationships - The final rule mandates that banks share customer data with 3rd party service providers, potentially equalizing the playing field and allowing fintechs to compete more directly with traditional institutions. But along with the opportunities come challenges: fintechs and banks must navigate and negotiate issues like data ownership, tokenization, and robust security standards. As this regulatory shift reshapes bank-fintech dynamics, the industry could see new forms of partnerships emerge—or existing hierarchies overhauled. Redefining Bank-Fintech Relationships - Lowering Financial Barriers for Startups - Currently, many fintech startups could spend more than $500 per user per month on bank account connectivity, with additional fees for each ID verification or additional services. By calling for specific data-sharing standards, the 1033 rule aims to make accessing financial data less costly and more reliable. Organizations like FDX (Financial Data Exchange) have already mapped out an extensive range of standards that may be used for data-sharing, from tax records to account balances. With this standardization, fintechs could experience fewer financial hurdles, enabling them to allocate resources toward innovation and customer acquisition. Lowering Financial Barriers for Startups - FDX (Financial Data Exchange) Despite the optimism, there are limitations to the immediate impact of the 1033 rule. Data Aggregators Stay in Play - Large data aggregators like Plaid , Finicity , Yodlee , and MX continue to control data flows, maintaining their role as data gatekeepers and charging fees for access. The 1033 rule may reduce costs somewhat, but free access to data remains unlikely. These established data companies might provide more value-added services, similar to providers like Codat and Rutter , focusing more on analytics and integrations rather than simply enabling data connections. Data Aggregators Stay in Play - Plaid Finicity Yodlee MX Codat Rutter For fintechs, access to bank data is just one line item in a budget dominated by customer acquisition and operational expenses. For instance, digital lenders find that data access costs are a small fraction of their overall costs. While Open Banking could improve operational efficiencies, the true impact on expenses depends on broader shifts in how these companies manage marketing, sales, FTEs in underwriting and back offices, etc.. Small Bank Exemptions - Not all U.S. banks fall under the 1033 rule. Banks with less than $850 million in assets are exempt, leaving over 3,000 institutions outside its immediate scope. While large banks hold the lion’s share of deposits and fintech partnerships, smaller banks are critical players in areas like small business lending and community-focused financial services. Without direct regulatory pressure, many smaller banks may still feel peer pressure to modernize as they look to retain customers and diversify their revenue streams. Fintechs aiming to serve niche markets may find opportunities in partnering with these smaller institutions, leveraging joint resources to build API connectivity. Small Bank Exemptions - Open Banking Isn’t Essential for Every Fintech - The 1033 rule opens the door for Open Banking, but it doesn’t mean every fintech needs to jump in with both feet. Many startups already have access to necessary financial data through other means, whether from platforms like Amazon , Salesforce , or QuickBooks . For some, targeted data tools—such as OCR for document processing—may be more practical and needed than adopting a full Open Banking approach. The value of Open Banking depends largely on a company’s business model, and not every niche fintech will find it necessary. Open Banking Isn’t Essential for Every Fintech - Amazon Salesforce QuickBooks OCR Conclusion: A Step Forward, With Caution The CFPB’s 1033 rule signals an important step toward Open Banking, offering fintechs lower data access costs, easier integrations, and a more level playing field with traditional banks. But this isn’t an open invitation to abandon established relationships or existing systems. Key gatekeepers remain, data costs may not fall as dramatically as some hope, and fintechs will need to consider carefully which aspects of Open Banking will genuinely support their growth. Ultimately, the 1033 rule isn’t a complete game changer, but a nudge forward—a chance for fintechs to reimagine what’s possible within a still-developing Open Banking ecosystem in the U.S.

How Does the 1033 Open Banking Rule Impact FinTech Startups in the US?

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