Private-Sector Nudging: The Good, the Bad, and the Uncertain

Abstract

Government has a valuable role as the “nudger of last resort,” especially when nudges can’t or shouldn’t be limited to self-aware or paying customers or when nudges replace more expensive and/or distortionary subsidies and taxes. This role is not without responsibilities, however, namely, to maintain a fiduciary duty to the consumer’s long-term preferences rather than impart value judgments of what consumers’ long-term preferences should be and to give the market a chance to nudge in a helpful manner before taking over to “fix” the situation.