Informational Requirements of Nudging

A nudge is a paternalistic government intervention that attempts to improve choices by changing the framing of a decision problem. We propose a welfare- theoretic foundation for nudging similar in spirit to the classical revealed preference approach, by investigating a model where preferences and mistakes of an agent can be elicited from her choices under different frames. We provide characterizations of the classes of behavioral models for which nudging is possible or impossible, and we derive results on the required quantity of information. We also study an extended application to a savings problem.

Keywords: Nudge, framing, behavioral welfare economics, revealed preference

JEL Classification: D03, D04, D60, D82

Suggested Citation: Suggested Citation

Benkert, Jean-Michel and Netzer, Nick, Informational Requirements of Nudging (August 2016). University of Zurich, Department of Economics, Working Paper No. 190, Available at SSRN: https://ssrn.com/abstract=2597631 or http://dx.doi.org/10.2139/ssrn.2597631