Nudging “Nudging” Forward: A Theoretical and Experimental Exploration of the

Relationship Between Choice Architecture and Autonomy

By
KENDRA TULLY
DISSERTATION

Submitted in partial satisfaction of the requirements for the degree of

DOCTOR OF PHILOSOPHY
in
Political Science
in the
OFFICE OF GRADUATE STUDIES
of the
UNIVERSITY OF CALIFORNIA
DAVIS
Approved:
___________________________________________________
Robert Taylor, Chair
___________________________________________________
John Scott
___________________________________________________
Amber Boydstun
Committee in Charge
2020

i
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Table of Contents
Acknowledgements .................................................................................................................................... iv
Abstract........................................................................................................................................................ v
Chapter 1: Challenging What We Think About How We Think ........................................................... 1
1.1 Nudges ................................................................................................................................................ 2
1.2 The Skeptics....................................................................................................................................... 4
1.3 Choice Architecture and Autonomy ................................................................................................ 5
1.4 Testing the Theory ............................................................................................................................ 8
1.5 So What? .......................................................................................................................................... 11
Chapter 2: Critics of Nudging.................................................................................................................. 12
2.1: A Note On Paternalism ................................................................................................................. 12
2.2: The transparency critique ............................................................................................................. 16
2.3: The transparency critique – responses ........................................................................................ 21
2.4: The autonomy critique .................................................................................................................. 26
2.5 The autonomy critique – response................................................................................................. 27
2.6 Conclusion ....................................................................................................................................... 28
Chapter 3: How Choice Architecture Can Enhance Autonomy and Mitigate Inequality ................. 31
3.1: Introduction ................................................................................................................................... 31
3.1.1 Assumption 1: More choice is better ...................................................................................... 32
3.1.2 Assumption 2: All Choices Are Created Equal ..................................................................... 34
3.2: How Choice Architecture can Enhance Autonomy .................................................................... 36
3.2.1 What Does Autonomy Mean? ................................................................................................. 36
3.2.2 Enhancing Autonomy .............................................................................................................. 39
3.2.3: How Choice Architecture can Mitigate Inequality .............................................................. 42
3.3 Conclusion ....................................................................................................................................... 47
Chapter 4: Experiment 1 – Effect of Choice Architecture on Subjective Responses.......................... 50
4.1 Introduction ..................................................................................................................................... 50
4.2 Theory .............................................................................................................................................. 51
4.3 Experimental Design and Methods ............................................................................................... 56
4.4 Results .............................................................................................................................................. 58
Figure 4.1. Treatment Effects on Feelings Scale (N=357).............................................................. 60
4.5 Discussion......................................................................................................................................... 60
Chapter 5: Experiment 2 – Effect of Choice Overload and Scarcity on Cognition and Confidence. 63

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 5.1 Introduction ..................................................................................................................................... 63
5.2 Scarcity............................................................................................................................................. 65
5.3 Choice Overload .............................................................................................................................. 67
5.4 Compounding Effects ..................................................................................................................... 71
5.5 Experimental Data and Methods ................................................................................................... 75
5.6 Results .............................................................................................................................................. 77
Figure 5.1. Treatment Effects on Confidence Score (N=275)........................................................ 78
Figure 5.2. Treatment Effects on Matrix Score (N=275) ............................................................... 79
5.7 Discussion......................................................................................................................................... 80
Conclusion ................................................................................................................................................. 85
Appendix A. Survey Design, Experiment 1 ............................................................................................ 88
Appendix B. Survey Design, Experiment 2............................................................................................. 94
Bibliography ............................................................................................................................................ 107

iii
Acknowledgements

First and foremost, I would like to thank my dissertation advisor, Dr. Robert Taylor, for his
guidance and mentorship. Thank you for reading my drafts, always sending me useful (and
prompt) feedback, and allowing me to be creative with my research. Second, I would like to
thank three other professors who contributed their time and expertise to my project: Dr. John
Scott (committee member), Dr. Amber Boydstun (committee member), and Dr. Shalini
Satkunandan. Finishing my degree and writing my dissertation would not have been possible
without the support and inspiration from so many of my fellow graduate students: Nahrain
Rasho, Ross Butters, Slande Erole, Daniel Simmons, Maria Pantoja, Sam Tyler, Fiona
Ogunkoya, David Bracken, Yoonjung Lee, Jesse Hammond, Marisella Rodriguez, and Daniel
Tapia-Jimenez. Most of all, I want to thank my dad (and his MBVs), my mom, my Aunt Marit,
my Uncle Andy, Isaac Cuevas, and my cat Morty for their unconditional love.

iv
Abstract
The behavioral revolution of the late 20th century continues today as research in economics,
psychology, neuroscience, and political science challenges what we think about how we think.
Behavioral science reveals that human decision-making is fallible in predictable ways. No one has
been more responsible for connecting the insights of behavioral science to public policy than
Richard Thaler and Cass Sunstein. They argue policymakers can utilize public policy to counteract
the negative impacts of biases and increase welfare using “nudges.” A nudge is “any aspect of the
choice architecture that alters people’s behavior in a predictable way without forbidding any
options” (Thaler and Sunstein 2008, 6). Because of their work, governments and organizations
around the world have established internal bodies to advise officials on the application of
behavioral insights in policy. This work, also referred to as “choice architecture,” generates wide
appeal because the solutions are cost-efficient and effective.
Some scholars rightly fear that the contemporary wave of nudging threatens individual
autonomy by weakening individual decision-making and undermining government transparency.
This paper summarizes and addresses those critiques and proposes that choice architecture can in
fact enhance individual autonomy. These critiques rely on two major assumptions: more choice is
better and context does not matter. A growing body of literature demonstrates that more choice
can lead to choice overload, causing regret, dissatisfaction, and choice paralysis. Individuals are
especially susceptible to choice overload in contexts where the decision is complex, rare, resource
intensive, and consequential (i.e. health care and finance). This paper proposes that in policy
contexts where knowledge is low and stakes are high, choice architecture can improve autonomy
by increasing individual material (i.e. physical and financial) and cognitive resources. While
nudging appears to decrease autonomy in the short-term, it increases autonomy in the long-term
by increasing resources necessary to act on one’s values and goals. By improving navigability for
complex choices, nudging also protects individuals from choice overload, allowing them to expend
their cognitive resources on more meaningful choices. Utilizing choice architecture in certain
policy contexts can also improve individual outcomes and boost feelings of self-confidence and
assurance, both of which are necessary to act autonomously. This paper explores the empirical
possibilities of this theory in two experiments testing the effect of choice context and choice
architecture on cognition and feelings of confidence, competence, and satisfaction. The first
experiment finds that restricting choice improved feelings of competence and confidence. The
second experiment finds that introducing an element of scarcity to choice overload significantly
reduces feelings of confidence, competence, and satisfaction.
The theory and arguments in this paper present a novel way to look at the impact of choice
architecture on autonomy. The paper offers a philosophically defensible argument grounded on a
robust, theoretical understanding of autonomy. This paper advances our understanding of the
potential for choice architecture so that we can move beyond questions of “why,” and towards
questions about when, where, and how to use choice architecture to improve autonomy and
welfare.

v
Chapter 1: Challenging What We Think About How We Think
The behavioral revolution of the late 20th century continues today as research in

economics, psychology, neuroscience, and political science continues to challenge what we think

about how we think. The earliest economic models portrayed man as homo economicus –

perfectly rational, self-interested utility maximizers. Many economic models still utilize this

portrait as an underlying assumption. Today, growing evidence in the behavioral sciences

challenges this assumption, instead demonstrating that human decision-making is fallible in

predictable ways. Humans can be rational, but rationality is only half of the story.

Behavioral scientists argue that human cognition operates using 2 different “systems.”

System 2, responsible for reflection, rational judgment, and critical thinking, is how scientists

previously conceived of the human brain. System 1 represents the “irrational” side, the one that

reacts automatically and unconsciously to stimuli and utilizes heuristics and shortcuts to

overcome cognitive barriers (Kahneman 2011). We have no control over how and when System

1 operates, but we do have a choice whether to engage System 2 to reconsider the output from

System 1. For example, my impulse at the grocery store might be to buy the brands I recognize,

but I can engage system 2 to more carefully compare different products along a number of

different dimensions (price, quantity, ethical sourcing, etc.).

Given the increasing complexity of our modern world and the constant demands on our

attention, our reliance on System 1 is inevitable. However, this is not necessarily a bad thing. If

we had to engage System 2 for every decision we made throughout the day we would never get

anything done. In some cases, our use of heuristics and mental shortcuts can help us to overcome

cognitive barriers to make decisions in our best interests (e.g. the use of party ID as a heuristic

for voting). But in many other cases, unconscious cognitive biases can lead to poor outcomes.

1
Overconfidence can lead to bad investments, status quo bias can lead us to forego important

opportunities, and framing can make us susceptible to negative media messages.

1.1 Nudges
The work of Richard Thaler and Cass Sunstein demonstrates how we can harness the

power of public policymaking to counteract the negative impacts of biases and increase welfare

using “nudges.” A nudge is “any aspect of the choice architecture that alters people’s behavior in

a predictable way without forbidding any options or significantly changing their economic

incentives” (Thaler and Sunstein 2008, 6). The policymaker behind the nudge is the “choice

architect,” or the individual with the “responsibility for organizing the context in which people

make decisions” (Thaler and Sunstein 2008, 3). In Nudge, Thaler and Sunstein explore the

possibility for nudging in personal finance (e.g. investing and retirement) and health care

(prescription drugs and organ donation). Importantly, the goal of the nudge should be to make

people better off, “as judged by themselves” (Sunstein 2019, 33). Nudge theory, or choice

architecture, is essentially the overarching theory that altering the choice environment can

produce different outcomes and improve the wellbeing of the individual. Humans react to their

environment and if we can alter the environment, we can alter the outcome for the better.

The best way to understand the benefits of nudging is to understand the negative effects

of bad choice architecture. A prominent example Thaler and Sunstein use in Nudge is the rollout

of Medicare Part D prescription drug plans in 2005. The goal of the Medicare Part D plans was

to offer coverage of prescription drugs, mainly to seniors. The number of plans offered differed

by state but were in the range of 50 to 60 stand-alone plans and 15 to 142 joint plans. The default

option for most seniors was non-enrollment or random enrollment (for the 6 million seniors and

disabled people covered by Medicaid). As predicted, the design of the program caused mass

2
confusion among seniors, families, and health care providers, non-enrollment of four million

Medicare beneficiaries, and the random enrollment of some seniors left them under-covered and

unable to pay for all of their necessary medications (Thaler and Sunstein 2008, 162-169). Due to

the power of the status quo bias, many people chose not to switch, even though doing so could

have saved them hundreds of dollars.

I highlight this example for two reasons. First, it is a good real-world example of the

impact of choice architecture. While defaults are a stock and trade tool used by choice architects,

they should also be smart defaults. Thaler and Sunstein cite Maine as a good example of

“intelligent assignment” (Thaler and Sunstein 2008, 174). Maine matched beneficiaries based on

cost and prescription drug usage and sent letters to some beneficiaries informing them they could

save money by switching. Designing a program that matched participants with cost effective

plans improved navigability for seniors and directly impacted their welfare. Second, this example

shows how poor choice architecture in public policy often disproportionately effects vulnerable

populations (i.e. elderly, minority, and low-income). Using choice architecture to alter individual

behavior can not only improve individual outcomes, but also improve the welfare of entire

communities.

Since the late 2000s, governments around the world began establishing internal entities to

advise officials on the application of behavioral insights and nudges in policy. To date, the

following countries and international organizations have established internal behavioral insights

units: Australia, Canada, Denmark, France, Germany, Netherlands, Peru, Singapore, United

Kingdom, United States (briefly), the World Bank, and the United Nations. Nudge theory has

become increasingly popular because solutions to behavioral problems are often straightforward,

effective, and inexpensive (Benartzi et al 2017). Why spend taxpayer money on an expensive ad

3
campaign about the benefits of organ donation when changing the default option on a registration

form garners the same results? Applying choice architecture to policy requires studying the

decision-making context, pinpointing faults in behavior that are leading to poor outcomes and

applying solutions to correct or sidestep those faults for individual and public benefit. The

individual wins by experiencing increased welfare and the government wins by avoiding

unpopular mandates and costly policies. Choice architecture in public policy generates wide

appeal because the results are tangible, and the policy is cost-effective. For these reasons and

others, Thaler and Sunstein proclaim nudge theory as a true “third way” between conservatives

who want to protect free choice and liberals who favor government intervention.

1.2 The Skeptics

Advocating for the reconstruction of choices to manipulate the behavior of the chooser

naturally spurs skepticism from the right and the left. On the left, scholars argue that nudges are

ineffective and opaque. Instead, they advocate for bans and prohibitions. On the right, scholars

argue that the threat to individual autonomy posed by these policies outweighs welfare

considerations. These critiques hinge on assumptions about rationality, autonomy, and welfare.

Critics not only question the assumption that individuals are irrational (or even boundedly

rational), but also argue that nudge-style policies weaken individual decision-making.

Governments should preserve the freedom of choice, even if it means humans experiencing

cognitive biases inflict self-harm.

Anti-nudge proponents make both rights-based and moralistic arguments. According to

the former, freedom of choice is an inviolable right of individuals and citizens. According to the

later, maturity is gained by making mistakes and learning from them. Choice architecture, by

taking away the opportunity to fail, hampers the development of individuals into flourishing

4
adults. Finally, much of the right-leaning, libertarian critique boils down to a deceptively simple

syllogism: choice is a fundamental component to autonomy and autonomy is essential for

welfare, so the preservation of choice is essential to welfare (Schwartz and Cheek, 2017). Thus,

the denial of choice might be both disrespectful and harmful to the individual.

In chapter 2, I summarize the major criticisms of choice architecture. I begin by

addressing what Thaler and Sunstein mean by “libertarian paternalism” and why that term is

problematic. Because of the theoretical complications involved with this terminology, I will refer

to their innovative policy approach as choice architecture or nudge theory in future chapters.

Perhaps because of their choice of words, much of the criticism received by Thaler and Sunstein

has come from paternalists, anti-paternalists, and libertarians. I group the critiques into two broad

categories: transparency and autonomy. Scholars concerned about transparency question the

ability of nudgers to approximate individual preferences and the ability of nudgees to check the

power of the nudgers. In a way, this critique is closely tied to the second critique. Scholars

concerned about autonomy argue nudging threatens individual autonomy and preference

satisfaction and inhibits the capacity for complex decision-making. After presenting the critiques

from the literature, I summarize the main defenses utilized by pro-nudgers before turning to my

central argument.

1.3 Choice Architecture and Autonomy

Since the proliferation of evidence-based policymaking and the rise in the use of

behavioral science insights in policy, critics have objected to choice architecture as an affront to

individual autonomy. This argument relies on two assumptions. First, critics rely on the

following syllogism: free choice is necessary for autonomy and autonomy is essential for

welfare. If free choice is the only way to guarantee my ability to direct my life and maximize my

5
preferences, then any restriction of choice should diminish my autonomy and welfare. However,

a growing body of literature demonstrates that too much choice leads to choice overload, an

inability to act, and poorer outcomes. Second, critics assume that more choice is always better,

regardless of the context. However, dozens of options of ice cream flavors are not the same as

dozens of options for health insurance plans. I narrow the scope of my argument to contexts

where knowledge is low, and stakes are high. These are contexts when more choice can

potentially diminish autonomy and freedom. Thus, these kinds of policy areas could benefit most

from the use of choice architecture.

After addressing these two assumptions, chapter 3 continues by defining autonomy.

When someone believes they are autonomous they typically mean they possess agency in their

life. They can act according to their innermost principles to achieve their goals in life, free from

external impediments. But how can individuals be considered fully autonomous given the

inevitability of environmental factors? To answer this question, I turn to the literature on

relational autonomy. Relational autonomy is not radically different than other notions of

autonomy, except that it recognizes the influence of one’s environment as a determining factor in

one’s ability to be autonomous. According to relational autonomy, being autonomous requires

agency, critical thinking, self-confidence (or self-respect), and external conditions that make it

possible to act upon one’s considered values and goals. The relationship between one’s

environment and autonomy can sometimes be improved by increasing choice and other times

improved by decreasing choice. The remainder of chapter 3 argues that restricting choice

counterintuitively improves conditions for acting autonomously.

Restricting choice in policy contexts that are complex, rare, and consequential, can

improve autonomy by increasing individual material and cognitive resources. For example,

6
implementing a default retirement plan increases individual financial resources, meaning they

can be more independent as they age and can spend it when they need it most. Additionally,

improving navigability for complex choices avoids the damaging effects of choice overload.

When individuals are nudged, not only are they free to focus on more important decisions, but

they might also feel more confident and assured about the outcome. Utilizing choice architecture

in certain policy contexts can improve individual outcomes and boost feelings of self-confidence

and assurance, both of which increase their capacity to act autonomously.

My final argument in chapter 3 concerns inequality. As stated previously, the populations

most likely to be impacted by choice overload and bad choice architecture are the most

vulnerable (i.e. seniors, low-income, minorities). These populations already deal with a shortage

of resources (financial, social, educational). Requiring that they navigate an overly complex

bureaucratic system means they will experience poorer outcomes compared to those with greater

means. And the effect of scarcity is real. Not only do vulnerable populations face a shortfall of

material resources, but also lack key cognitive resources necessary for complex decision-making.

Research shows that financial scarcity impacts cognitive performance and leads to poorer

decision-making (Mullainathan and Shafir 2013). Scarcity imposes a cognitive “bandwidth tax,”

making it difficult to pay attention, think abstractly, and resist temptation (Mullainathan and

Shafir 2013, 41-42). People experiencing poverty pay a high bandwidth tax and must live with

the shame and disrespect. Good choice architecture has the power to alleviate the high bandwidth

task by improving choice navigability. Additionally, thinking about poverty from the perspective

of behavioral science and choice architecture can change the way we perceive those in poverty.

Instead of attributing blame and assigning punishment to individuals in poverty, behavioral

science insights allow policymakers to speak of poverty in terms of context, cognition, and

7
psychology. Utilizing insights from behavioral science to structure choices, policymakers have

the potential to improve outcomes, enrich poverty rhetoric, and empower vulnerable populations.

1.4 Testing the Theory

My central theory is that choice architecture can enhance autonomy in contexts where the

decision is complex, rare, consequential, and resource intensive. To begin, I had to operationalize

“autonomy.” This was a difficult task, given autonomy is a theoretical concept and there is no

precedent in the literature for my study. As discussed previously, at least one of the conditions

for autonomy is a base level of self-confidence and belief in oneself. I cannot act on my deeply

held convictions and goals if I do not view myself as capable or my goals as worthwhile. If

choice architecture is shown to have a positive effect on feelings of confidence and competency,

then perhaps this could mark a first step towards a larger exploration of the relationship between

nudging and autonomy.

In chapter 4, I study the effect of choice architecture on feelings of confidence and

competence. Participants are asked to respond to a hypothetical scenario about health insurance.

The control condition received four choices and were asked to select one. The first treatment

condition received four choices but were nudged towards one of the options. The second

treatment condition could review all four options but did not make a choice and were told that a

plan was selected for them. My hypothesis was that participants in the control condition would

express significantly lower levels of confidence and competence relative to participants in the

two treatment conditions. Additionally, between the two treatment conditions, I predicted that

nudging the participants would result in significantly higher levels of confidence and competence

relative to participants who were not given a choice.

8
 Performing t-tests partially confirmed my expectations. Participants in the control

condition felt less confident and competent than participants in the two treatment conditions.

However, there was no statistically significant difference between the means in the first and

second treatment conditions. Contrary to assumptions made by critics on the right, restricting

choice actually improved feelings of confidence and competence. Individuals who received a

nudge or no choice at all reported feeling more confident about their choice and their ability to

make future financial decisions. But for critics on the left, the result indicates there might be no

meaningful difference between nudging or coercing participants when it comes to promoting

autonomy. I want to pause and be clear about what I am implying and what I am not implying. I

do not think that feeling autonomous is the same thing as being autonomous. So, it is a leap to

conclude from these results that choice architecture increases autonomy. What I do argue is that

increasing the good feelings felt in the experiment might help fulfill a necessary condition for

acting autonomously. Limitations and future directions are discussed at the end of the chapter.

In chapter 5, I test the relationship between choice architecture and feelings of confidence

and competence but introduce an element of scarcity. In the real world, individuals arrive at

choices with prior experiences. One of those priors is financial scarcity. My interest in the

second experiment was to test the compounding effects of financial scarcity and choice overload

on cognition and confidence. Previous research on scarcity shows that inducing financial scarcity

reduces cognitive performance, as measured by an IQ test (in this case, a Raven’s matrices test).

Previous research on choice overload indicates that when individuals are faced with too many

choices (particularly when those choices are complex), they exhibit choice paralysis and report

feeling dissatisfied and discontent. The design of this experiment attempts to study both how

9
each of these phenomena negatively effects cognition and confidence independently and how

combining scarcity with choice overload might worsen cognition and confidence.

To test my hypothesis, I first ask participants to respond to three hypothetical financial

scenarios and then ask participants to engage in a complex choice. Participants were recruited

from political science undergraduate classes. In the control conditions, students were presented

with three fictional scenarios that imposed a small financial burden and were then asked to select

a car insurance plan from a list of three options. Students in the treatment conditions were

presented with three scenarios that imposed a relatively high financial burden and asked to select

a car insurance pan from a list of eight options.

First, I predicted that students who experienced both scarcity and choice overload would

score significantly lower on the Raven’s matrices tests and feel significantly less confident,

competent, and satisfied than participants in the other experimental conditions. The results

indicate that students did feel significantly worse about their choice and their ability to choose

but did not score significantly lower on the Raven’s matrices test. The two remaining hypotheses

predicted that inducing financial scarcity or choice overload would also result in lower scores on

the Raven’s matrices test and cause students to feel less confident, competent, and satisfied. The

results for both tests were mixed. Participants who experienced scarcity or choice overload

scored significantly higher on the Raven’s matrices test than students in the control condition,

contrary to my expectation. And there was no statistical relationship between scarcity or choice

overload and feelings of confidence. This is the first attempt in the literature to jointly test the

effects of scarcity and choice overload. Further research is needed to confirm the results of this

experiment. Limitations and future directions are discussed at the end of the chapter.

10
1.5 So What?
At the same time as our environment is becoming more complex, behavioral science

research is revealing our cognitive limitations. The concurrent globalization of our economy,

rapid development of technology, and expansion of the bureaucratic state mean that our world is

becoming increasingly difficult to navigate. Globalization of the economy caused an explosion in

mass production and consumer choice. The rapid development of technology created new

avenues to capture our attention and remain constantly connected (and yet increasingly isolated).

Finally, the increasing complexity of the world demands a larger bureaucracy to oversee those

changes, in turn complicating government and reducing transparency. All of these changes mean

that the world is growing increasingly difficult to navigate. Instead of freeing us, this explosion

of information and choice often overwhelms and paralyzes us.

The theory I put forward here is that choice architecture can reduce that complexity and

improve navigability, and instead of diminishing autonomy, can assist in increasing it. This

argument is not new. Thaler, Sunstein, and other proponents of nudge theory have made similar

arguments. But what these arguments lack is a robust, theoretical understanding of what

autonomy means and a philosophically defensible argument for how choice architecture can

improve autonomy. I hope my dissertation begins to fill that gap and advances our understanding

of the potential for choice architecture so that we can move beyond questions like “why choice

architecture,” and move towards questions about when, where, and how to use choice

architecture. At the very least, I hope the discussion and evidence provided in the experiments

introduce more nuance in conversations around choice, its antecedents, and its consequences.

The societal problems facing us today are large (i.e. economic and racial inequality) and it will

take all the tools at our disposal to address them, including optimizing choice architecture.

11
Chapter 2: Critics of Nudging
2.1: A Note On Paternalism
There are several different terms used to describe behaviorally motivated public

policymaking – choice architecture, nudging, and libertarian paternalism. Generally speaking, we

can think of libertarian paternalism as the overarching paradigm, choice architecture as the

toolbox of policymaking, and nudges as a way to describe one of the tools in the toolbox. Thaler

and Sunstein in Nudge begin by claiming nudges as a form of libertarian paternalism – their own

jargon. In later works Thaler and Sunstein somewhat abandon this terminology, perhaps because

they realized the weighty implications of the description and the fact that it is an oxymoron. In

future chapters, I choose to refer to behaviorally motivated public policymaking as choice

architecture for several reasons. One, using choice architecture avoids the complicated and

theoretical implications of using libertarian paternalism. Two, choice architecture evokes the

action of this kind of policy-making – structuring choices. In my later discussions and

experiments I address the controversies evoked by libertarian paternalism as it relates to

autonomy but paternalism, broadly speaking, is not my focus. The reason I discuss paternalism

here is because some scholarly debate has been spurred by a misunderstanding or preoccupation

with the term libertarian paternalism, with some authors disagreeing with the use of libertarian

and/or paternalism (Mitchell 2005, Grune-Yanoff 2012). In order to clarify what Thaler and

Sunstein mean by paternalism, I briefly sketch the historical meaning of the term and how it has

evolved and delineate Thaler and Sunstein’s version of paternalism from others.1

1
Concerns from the libertarian camp about autonomy and government transparency will be
discussed later on in this chapter. The use of the word libertarian, however, is as problematic as
the use of paternalism. Libertarian tenets include the protection and sanctity of individual
preferences and decision-making and the prohibition of regulations that aim to manipulate
individual’s preferences (Mitchell 2005). Thaler and Sunstein associate libertarian with “choice-
preserving,” but choice architecture clearly violates some core tenets of libertarianism.
12
 According to the Oxford English Dictionary, paternalism is “the policy or practice on the

part of the people in authority of restricting the freedom and responsibilities of those subordinate

to or otherwise dependent on them in their supposed interest.” There are several key components

to this definition: 1) a relationship between an authority and subordinates, 2) an intervention of

some kind restricting the freedom of individuals, and 3) a justification of the intervention based

on the “supposed” interests of the individual. For the reasons mentioned, the relationship

between parent and child is the iconic example of paternalism. Parents restrict the freedom of

their children in countless ways (e.g. forcing them to wear a helmet when riding a bike) because

they have the legal and natural authority to do so and, presumably, know the child’s supposed

interests (i.e. not cracking their head open if they fall of the bike) and care about the child’s

interests (because they love them).

In contrast to the automatic acceptance of paternalism between parents and children, when

governments engage in paternalism, there is serious doubt whether: 1) they have the authority to

intervene, and 2) if they are adequate judges of what are the supposed interests of their citizens

(more on this later). There is a further component of paternalism not captured in the definition

above, but one that gets to the heart of why paternalism is objectionable to so many: the

implication that the subordinate is incapable of realizing their own supposed interests. In the case

of the child, it is reasonable to assume that the child might not know how to realize their interests

because they lack experience, foresight, self-control, etc. Presumably, over the course of our life

and our journey to “maturity,” we gain the experience, foresight, and self-control necessary to

match our means with our chosen ends.

As mentioned above, one of the assumptions of paternalism is that the individual whose

freedom is being restricted lacks the capacity to realize their supposed interests – they struggle

13
with matching the appropriate means to their larger ends. For example, many people may have

the great desire to eat healthy and lose weight (their end), but struggle with dieting and avoiding

fast food (their means). Paternalistic intervention can either be aimed at influencing ends (ends

paternalism) or means (means paternalism). Additionally, the shape of the intervention itself can

be hard (outright prohibitions like banning trans-fat in restaurants) or soft (behavioral

modifications like placing the highest calorie foods at the back of the menu).

Over the past couple decades, there has been a marked shift away from ends paternalism

and towards means paternalism. The paternalism of old, based on natural law or perfectionist

liberalism, placed objective and universal value on certain ways of life and human goods (Pickett

2018, 307-311). The focus of these types of paternalism is less on designing public policy and

more about the core commitments of society and making us better people. For natural law

philosophers (Hugo Grotius, Thomas Hobbes, John Finnis, Robert George), this commitment

requires the ban of morally objectional behavior (such as homosexuality). For liberal

perfectionists (John Stuart Mill, George Sher, Martha Nussbaum, Joseph Raz), their commitment

is to preserve rights, but still move individuals towards “objectively” better ends (such as the

pursuit of knowledge over pleasure).

While the distinction between hard and soft paternalism remains, contemporary

paternalism has (for the most part) abandoned any sustained philosophical defense of an

objective human good or universal account of morality. Instead, the contemporary wave of

paternalism shares three main characteristics: “an avoidance of any comprehensive account of

the human good; a reliance on the recent findings of behavioral economics and psychology; and

the use of a utilitarian calculus to determine when interventions are morally justified” (Pickett

2018, 301). In contrast to the old paternalists, who flatly called for a substitution of preferences

14
from what people want to what they should want, contemporary paternalism is concerned with

how to maximize the individual’s own preferences.

Why the drastic shift in focus and why now? Much of the current literature on

paternalistic policymaking is coming from departments of economics, law, public policy, and

public health. The growth and advances of experimental social science have made it possible to

understand where and when individuals appear to fail in their decision-making. Since economics

and social science is concerned with increasing efficiency or maximizing welfare, philosophic

defenses of contemporary paternalistic interventions are rare. Given the advent of the

contemporary literature is primarily quantitative, there is an inherent attraction towards justifying

these interventions quantitatively, using cost-benefit analysis. While the debates over how to

define paternalism “is largely confined to circles in philosophy and political theory,” “most of

the advocates of new paternalism are economists or in more technical or applied fields, where

philosophical issues are less central” (Pickett 2018, 304). Perhaps this scientific, analytical

approach explains the growing popularity of modern paternalism in public policy. Justifying

paternalistic interventions empirically can be less controversial and more transparent then

legislative debates on moralistic terms.

Thaler, a behavioral economist, and Sunstein, a law professor, approach paternalism from

a legalistic and scientific framework. Libertarian paternalism is so called because it combines a

respect for freedom of choice (the libertarian part), while encouraging people to make decisions

that will lead to increased welfare (the paternalistic part). For them, paternalism is justified by

the wealth of scientific evidence on cognitive biases. Libertarian paternalistic policies seek to

make people better off by relying on their cognitive biases and establishing a choice structure

that accords with what individuals would have chosen for themselves absent their cognitive

15
biases. 2 Again, nudges are “any aspect of the choice architecture that alters people’s behavior in

a predictable way without forbidding any options or significantly changing their economic

incentives” (Thaler and Sunstein 2008, 6). Nudges try not to exacerbate our cognitive biases but

rather seek to increase “navigability” – “making it easier for consumers (and others) to get to

their own preferred destination” (Sunstein 2015, 208, see also Hanna 2015).

Although not explicit about the distinction, Thaler and Sunstein utilize the term

libertarian paternalism quite differently than traditional conceptions of paternalism. Firstly, this

“new paternalism” lacks any comprehensive definition of the human good. Again, nudging is

more focused on helping people with the means to their own predetermined ends. Second,

policies are formulated and justified using quantitative evidence, not moralistic argument.

Finally, nudges are evaluated using cost-benefit analysis. If the nudge is not working or imposes

high costs on the individual/society, then the nudge is abandoned. While Thaler and Sunstein

intend the use of “libertarian” to modify their use of paternalism, the term is still inadequate to

describe their particular form of paternalism as distinguished from older conceptions of

paternalism. For this and other reasons stated above, I will employ the term choice architecture

in later chapters.

2.2: The transparency critique

The primary feature of nudges is that they attempt to circumvent cognitive biases to

improve welfare. In some cases, the intervention could be educative, informing individuals of the

2
A twin of libertarian paternalism, asymmetric paternalism, is also predicated on the assumption
of irrationality. Another way of stating that nudges aim to help us make difficult decisions while
leaving choices available for those that wish to choose contrary to the nudge is the way Camerer
et al. (2003) describe asymmetric paternalism: “regulation is asymmetrically paternalistic if it
creates large benefits for those who make errors [from bounded rationality], while imposing little
or no harm on those who are fully rational” (1212). Asymmetric paternalism also packs the same
policy tools in their toolbox: defaults, providing information, cooling-off periods, and limiting
choices. Why libertarian paternalism stuck, and asymmetric paternalism did not, I do not know.
16
bias they may be experiencing, but for the most part nudges try to influence individual choice.

For this reason, skeptics are critical of the transparency of nudging and perceive them as

inherently manipulative. If nudges are successful regardless of whether individuals know they

are being nudged, doesn’t this present a challenge for oversight and transparency? Since nudges

involve subtle changes that impact behavior, it can be difficult to maintain the kind of

government transparency necessary for democratic oversight. If citizens lose the ability to check

the actions of government, it becomes more likely that government will exercise illegitimate and

arbitrary power over citizens (Grüne-Yanoff 2012, 638). Further, libertarian critics assert that

government will fail to approximate the preferences of citizens and so fail the criterion that

nudges are interventions that encourage decision-makers to choose the best options ‘as judged by

themselves’ (Thaler & Sunstein 2008). They fear that the attempt to capture citizen’s ‘true

preferences’ will be impossible at best and manipulative at worst (White 2013; Arneson 2015;

Hanna 2015). This section will discuss the transparency critique (from the ideological left and

right) in more detail and offer some preliminary responses.

One of the primary leftist critics of libertarian paternalism is Sarah Conly, who argues

that nudges are manipulative and are not the most effective way to increase welfare. Instead,

Conly proposes “coercive paternalism.” Coercive paternalism begins by accepting the cognitive

failings identified by social science research but ends up justifying hard paternalistic

interventions. As the title so nicely indicates, Against Autonomy by Sarah Conly, questions the

value of autonomy in the face of outcomes like crushing debt, obesity, and risks of cancer from

smoking. In weighing the costs and benefits, Conly argues that the benefits to banning choice in

these circumstances far exceed the costs if people were left to choose for themselves. In fact,

restricting choices in some cases can be liberating: “government intervention allows us to focus

17
our decision making on the decisions we actually care about” (Conly 2013, 11). If left to our own

devices, the abundance of choices we would have to make on a regular basis would be

debilitating, preventing us from pursuing the ends we believe are most valuable (raising our kids,

working on our career, finding a life partner).

While coercive paternalism shares some similarities with libertarian paternalism – the

reliance on cost-benefit analysis and a focus on means versus ends paternalism – Conly argues

nudges are not enough. According to Conly, when it comes to certain decisions allowing the

individual to inflict “serious and irreparable harm” on themselves, the preservation of choice still

allows the individual to make the “wrong” decision. Further, nudges themselves are

manipulative, relying on individual’s cognitive biases to help them make the “best” choice.

Instead, eliminating options ensures individuals will not make the wrong choice and foregoes the

illusion of preserving choice. Coercive paternalism is like setting a default, without the option to

deviate from the default. The effects of these policies (e.g. bans on trans-fat, smoking, and high

interest loans), Conly insists, will be immediate and ensure the best interest of the individual (i.e.

better health and financial security). While defining coercive paternalism is straightforward,

justifying these kinds of interventions is another matter. Conly proposes bans based on

assumptions about individual preference, but these policies might be at a higher risk of violating

individual preferences by eliminating choice. This leads to a larger concern about whether it is

possible or desirable to try and determine individual preferences to justify government

intervention.

Modern paternalists like Thaler, Sunstein, and Conly, justify interventions as a means to

improve welfare. They assume welfare is a package of hedonistic goods everyone is presumed to

want – good health, financial security, and overall wellbeing. There is no metaphysical or moral

18
claim about what should constitute welfare. This universal and practical approach to welfare

concerns anti-paternalist and pro-libertarian scholars. They argue that paternalistic policies fail to

understand and achieve individual’s best interests in two significant ways. Firstly, using a purely

utility calculus to understand “best interests” cannot offer us insight into individual’s higher

order interests (Mitchell 2005). Second, when assessing the merit of higher order interests,

planners must assume a ranking in order to evaluate how best to design a policy, which could

conflict with individual’s actual ranking: “the planners’ interpretation of health and welfare

trade-offs with other values comes to inform choice architecture in a way that will surely clash

with many people’s views” (Glod 2015, 614; see also White 2013, 72-73). Sometimes one

group’s ends are likely to conflict with another group’s means, and sometimes we might be

likely to misunderstand the best interests of the individual.

Anti-paternalists are also interested in the epistemic disagreement about the nature of

preferences. The assumption by modern paternalists is that an individual’s preference is not what

is acted upon in the moment, but what individuals would have chosen, given access to all the

information while fully rational. But the anti-paternalist asks, why are we giving preference to

what economists’ judge to be the “rational” decision instead of revealed preferences? For

example, the paternalist who implements a default, opt-in retirement policy might check back in

a few years and take the high enrollment as evidence that everyone wanted to be signed up in a

retirement plan. Or consider a simpler example. Today I woke up as more of a cat person,

although yesterday I woke up as more of a dog person. Which preference is a truer representation

of who I am? Can there be a difference between my preferences and my actions? Instead of

assuming inconsistencies are a sign of “irrationality”, perhaps preferences are naturally

incoherent and should be respected as such (Sugden 2008). Simply put, “we all make dumb

19
choices from time to time – but no one can possibly know our choices are bad except us” (White

2013, 69). Even if our actions are not in line with our preferences, they should be respected

because they “help structure our lives, shaping our identity over time” (Grill 2015, 704) (more on

identity formation and individuation below). Obviously, modern paternalists are not expressly

concerned about the epistemic nature of preferences, as they are approaching government

intervention from a purely utilitarian perspective. However, this concern is another

demonstration of the work that needs to be pursued to establish a firmer theoretical justification

for modern paternalism.

Setting aside philosophical concerns about the nature of preferences, anti-paternalists also

fear that paternalistic policymaking will place too much power in the hands of lawmakers.

Opponents of nudges wonder, if the government can use defaults, reminders, and taxes to

influence behavior, what is to stop them from embedding subliminal messaging during television

broadcasts (like quarter second clips that flash between each commercial)? The latter strategy

seems creepy and big brother-ish in a way that the former strategies do not, because subliminal

messaging is not transparent in the same way as defaults, reminders, and taxes. Nudges are

effective precisely because they play into our cognitive defects and so can be hard to detect. If

citizens do not know what is being done to them, they might not be able to hold government

accountable; “it will hard for citizens subject to such policies to check how government is

manipulating them, as neither the effects nor the conditions of legitimacy of the policies are fully

transparent” (Grune-Yanoff 2012, 638). This fear is not only shared by anti-paternalists, but also

coercive paternalists like Sarah Conly, who argue that nudges are more manipulative than bans.

However, even coercive paternalism is subject to this line of argument. The restriction that the

policy be in the best interest of the citizens is theoretically attractive, but might be difficult to

20
maintain, given countervailing influences on lawmakers. What is to stop this power from turning

our country’s government into something from a dystopian novel (i.e. Brave New World or

1984)?

Although not explicitly mentioned, modern paternalists begin from the assumption that

democratic institutions are in place to check the actions of government officials. Although

paternalism and totalitarianism can go hand in hand, paternalism does not automatically imply a

totalitarian state (Conly 2013, 74-76). And again, the probability of helping people through

paternalistic intervention is much higher than the probability a democracy will dissolve into a

totalitarian state because of paternalistic interventions. However, the concern that paternalistic

policies will not be transparent is a roadblock to the proper functioning of democratic institutions

and is an issue I will cover in more detail in the next chapter. In this section, I have focused on a

series of critiques by critics concerned about the manipulative quality of nudges and government

transparency. In the next section, I turn to a series of critics who argue that modern paternalism

negatively effects individual autonomy.

2.3: The transparency critique – responses

One of the primary concerns of anti-paternalism scholars is that decision makers will fail

to approximate individual preferences and therefore, individuals should be left to make their own

choices about what is in their best interest. However, in some cases, individuals might not know

what is best. Modeling a health insurance exchange, researchers asked respondents to select the

move cost-effective policy and found that respondents who were presented with a default

performed better than respondents left to their own devices (Johnson et al. 2013). Calculating

cost-effectiveness for a health insurance plan is complex, especially the first time, and most

respondents tended to overweight deductibles and underweight premiums (Johnson et al. 2013).

If individuals are uncertain about their preferences (or about how to select the means to their own

21
ends), it might be better to make an educated guess than leave people to their own devices (more

on this later).

Not only are individuals unaware of their preferences in some circumstances, their

preference might actually be not to choose. One survey found that “people want more choice in

the mundane, everyday domains (e.g. flavors of jam) than in the more consequential domains of

health care decisions” (Schwartz and Cheek 2017, 113). It is not universally true that people

want more choice and they may prefer less choice, or no choice at all. In cases where individuals

are “happy either way,” the imposition of choice could be more paternalistic and run counter to

individual preferences than if the decision were made for them (Sunstein 2019, 81).

Paradoxically, providing less choice may respect individual preferences more so than forcing

them to choose in circumstances where they feel ill-equipped or indifferent.

The goal of contemporary paternalists, however, is not to make guesses about

individuals’ best interests, but to the extent possible, actually measure these preferences. The

same argument applies to value trade-offs (although this scenario is a bit more complex). The

goal is to approximate as closely as possible what individuals would choose for themselves. In

many of Thaler and Sunstein’s examples, this effort to capture actual preferences is achieved

through surveys. For example, an overwhelming majority of people are interested in donating

their organs, but just fail to check the box (Thaler and Sunstein 2008, 178). In another survey,

they find that nearly 70% of individuals agreed that their savings rate for their retirement plan is

too low, yet they fail to change it (Thaler and Sunstein 2008, 109). These are situations where

individuals have a clear idea of their preferences, but because of their cognitive barriers (status

quo bias in these two cases), they fail to act to realize those preferences.

22
 Another one of the significant concerns of anti-paternalists is government transparency

and the ability of citizens to check the government. First, Thaler and Sunstein make the point that

choice architecture is inevitable. No matter how unregulated the choice environment might be,

the presentation of options cannot be entirely neutral. Critics of choice architecture assume that

policy makers are moving from a state of choice neutrality to choice control, but choice

architects are always exerting some level of control; thus, choice architecture is “inevitable”

(Sunstein 2014, 16). Policy makers are almost always consciously or unconsciously motivated to

present options in a certain way, whether to maximize profit, conform to social norms and

customs, or promote welfare. If choice architecture is inevitable, our job as a public is to

determine which motives are justifiable in which settings and to what ends.

Unchecked nudging is certainly a legitimate problem, but it can be overcome with the

proper incentives, institution designs, and norms to restore public trust. Besides standard

democratic and legislative institutions that guarantee a representative government (i.e. term

limits, voting, checks and balances, campaign finance transparency, freedom of the press), there

are other innovative ways to prevent nefarious government intervention. For example,

governments that want to incorporate behavioral research and nudging into policy can establish

an independent “nudge unit” responsible for conducting research, gathering data, and advising

the legislative/ executive branches. Intellectual integrity of the unit can be ensured by requiring

research to be non-partisan, verified by a third party (like a professional journal or university),

publicly accessible (with open data sharing), and pre-registered (Maynard and Munafo 2018).

Government can also institute “standards of legitimacy” to guide legislative action. These

solutions could and should be explored further, but this brief discussion demonstrates how we

23
can harness the positive benefits of libertarian paternalism without abandoning our democratic

commitments and eroding the public trust in government.

Another source of disagreement among paternalists and anti-paternalists is justifying

intervention. Because anti-paternalists place such a high and principled value on individual

freedom, government must reach a stricter standard to justify intervention. However, modern

paternalists like Thaler, Sunstein, and Conly place a higher value on welfare and pursue a

consequentialist standard when justifying policy decisions. Conly states, “what makes

paternalism permissible is not a function of the intrinsic features of the situations as much as how

much some interventions costs us, both in terms of the psychological burden and social ones”

(2013, 7). This worries anti-paternalists because if the justification for intervention rests solely

on the benefits and produced by the policy, then presumably no area of policy is sacred and off

limits. Unfortunately, there is no cut and dry limit to paternalistic intervention. Matters are a bit

more complicated than that. One intrinsic feature of the situations that are targets for traditional

paternalistic intervention is when the behavior of the individual is causing short or long-term

self-harm (Conly 2013, 73). But understanding the nature of “harm” is just a starting point.

Calculating costs and benefits is equally indeterminate – they could be limitless.

There are what we might consider transparent costs and benefits, which are immediate

and mainly financial. In the case of banning smoking, for example, there are costs of

enforcement and implementation, the costs on the tobacco industry (through lost revenues or

wages), and the costs to the individual (spending more on cigarettes on the black market).

Transparent benefits might include lower health care costs (for the individual and society as a

whole), and higher savings for past smokers. And then there are what me might consider as

intuitive or unseen costs and benefits. Perhaps casual smokers will experience a loss of freedom

24
or habitual smokers will feel lower self-esteem by being reprimanded for their habit. Conversely,

habitual smokers might feel a sense of relief and be grateful for the “nudge” they needed to quit

smoking. All these costs and benefits are on the table and could be considered in the arguments

for and against banning smoking. The anti-paternalist might respond by arguing for more

information and education, but in the case of smoking, this has proven to be ineffective and easy

to tune out.

According to the modern brand of paternalism, interventions must be justifiable using

some sort of cost-benefit analysis. For example, when discussing the possible merits of

implementing a default retirement plan, Thaler and Sunstein argue that “the costs of saving too

little are greater than the costs of saving too much” (2008, 108). In other words, the gains from a

default retirement plan far outweigh the gains from not having a retirement plan. The worst

outcome from implementing a default retirement plan is that individuals will have less

immediate income, but the worst outcome from the status quo is that many more individuals will

lose out on adequate retirement savings. Some claims might be more valuable than others and the

gains overall should outweigh any potential losses. (in this case the argument that more people

will have retirement savings). Certainly, in the struggle to make society better off, there are

going to be some disgruntled folks who feel as if their interests are being overridden, but this is

true of any action by the government. Any time the government decides on a budget, executes a

military action, or builds a new road through a neighborhood, there are going to be people who

did not get their way. Much of this argument is predicated on the belief that government should

play an active role in the betterment of society, but this is not an assumption shared by all (as

evidenced by the anti-paternalist arguments).

25
2.4: The autonomy critique
Perhaps the most significant disagreement between paternalists and anti-paternalists is the

value of autonomy. I will cover the conception of autonomy I will be working with in detail in

the next section, but for now we can understand autonomy to be an individual’s control over

their values and all expressions of those values. According to anti-paternalists, autonomy is both

an intrinsic and instrumental good. For some, the practice and exercise of autonomy is what

separates human beings from the rest of the animal kingdom. Therefore, autonomy is

fundamentally connected to our identity as homo sapiens and should be protected from invasion.

The inviolable quality of self-government underpins liberalism and the defense for individual

rights. Feinberg nicely articulates the limits on liberty from the perspective of liberalism:

“respect for a person’s autonomy is respect for his unfettered voluntary choice as the sole

rightful determinant of his actions except where the interests of others need protection from him”

(Feinberg 1971, 68). Anti-paternalists believe that “harm or risk of harm to a person who

voluntarily consents to absorb the harm or stand the risks is never a good reason for criminal

prohibition” because it disrespects individual autonomy (Arneson 2005, 3).

Instrumentally, the practice of autonomy can help us achieve our life plans, improving

our ability to be self-sufficient decision-makers. Our choices become a reflection of our values

and deepest desires. For anti-paternalists, the exercise of our decision-making capacities

necessarily requires noninterference. Failure is an acceptable inevitability because it is essential

for individual growth and maturity. Deprived of the opportunity to fail, critics worry that

individuals will lose the ability to build resilience and critical decision-making. Additionally,

failures become part of our personal identity, shaping the trajectory of our lives. If the

government takes away the opportunity for people to fail, it takes away critical experiences

necessary to build character and strengthen rational judgment (Glod 2015, White 2013, Hausman

26
and Welch 2010, Bovens 2008, Feinberg 1971). Feinberg worries, “if adults are treated as

children, they will come in time to be like children. Deprived of the right to choose for

themselves, they will soon lose the power of rational judgment and decision” (1971, 105).

Critics argue that policy interventions like nudges encourage the detrimental effects of

System 1 (automatic processing) and discourages the use of System 2 (rational decision-making).

They argue nudges are manipulative because they oftentimes play into cognitive biases, instead

of promoting thoughtful consideration (Arneson 2015). Competent adults should be able to

approach every decision with careful thought as to its immediate and long-term consequences.

Prohibited from doing so, individuals will find it difficult to match their values and goals with

the appropriate actions. Anti-nudge scholars will argue that when we deny people the ability to

choose, we not only deny them self-government, but also inhibit their ability to be self-

governing.

2.5 The autonomy critique – response

There are a few responses to address these concerns. First, not all decisions are created

equal. When anti-paternalists worry about infantilization, what they are concerned with is the

ability of individuals to navigate life and to make choices that serve their general ends. However,

we are inundated with choice every day and some decisions we only make once or twice, yet

they have significant long-term consequences. For example, choosing a mortgage on a home or

enrolling in a health insurance plan is a rare choice and one that has considerable implications for

a person’s finances and health. According to Conly (2013), it would be immoral not to intervene;

The common rationale for letting people choose poorly is that autonomy requires that people
suffer the results of their own actions, for good or ill, but here respect becomes a
justification for inhumanity: the principle that those who fail deserve to fail isn’t one that is
geared to support equality and mutual respect (2).

27
Failure is certainly a part of learning and growth, but could the price of failure justify

intervention? Suppose a single mother of two is doing her taxes and misses out on an important

opportunity to receive a tax credit because the process to enroll was too time-consuming. She

could be a mature, competent adult and yet forego a major financial benefit because the system is

too complex to navigate. Is it more respectful and humane to abide by a principle that says,

“people who fail deserve to fail” or provide assistance that “lifts all boats” and increases

welfare? Even if we grant that failure leads to maturity, it is not clear from this example whether

the woman would even perceive the “failure” and correct it. Though it is true that maturity is not

gained without failure, a universal hands-off approach could lead to disastrous results (that may

even go undetected by those in harm’s way).

Second, paternalistic interventions are unlikely to worsen individual decision-making

because they are directed at scenarios where decision-making is already poor. According to

paternalists, when we make suboptimal choices due to our cognitive biases, we should take

advantage of those biases for the best interest of the decision-maker (Hanna 2015, 637).

Paternalism is not worsening our ability to be deliberative because we were not being

deliberative in the first place; “default rules [and other forms of intervention] increase the

likelihood of people choosing a particular option because the status quo is sticky. But they do not

create the stickiness” (Moles 2015, 657). The goal of paternalism is not to diminish the

deliberative capacity of individuals, but to assist individuals where their deliberative capacity is

deficient.

2.6 Conclusion
My purpose in this chapter was to present an overview of libertarian paternalism and

concerns from critics. Libertarian paternalism is a form of modern paternalism and differs from

traditional versions of paternalism in a few fundamental ways: a focus on means instead of ends,

28
the use of cost-benefit analysis, the use of cognitive and behavioral science to identify where an

intervention is needed, and an emphasis on the best interest of individuals. Within this broad

framework, paternalists disagree about the form of paternalistic intervention, whether it be soft

(libertarian paternalism) or hard (coercive paternalism). Inventing the term “libertarian

paternalism” is Thaler and Sunstein’s attempt to construct a “middle way” between concerns on

the right and the left. Instead, the term creates confusion and draws criticism from both sides.

From the perspective of another modern paternalist (Conly), libertarian paternalism is

manipulative and ineffective. Instead, she proposes outright bans preventing behavior that policy

makers deem harmful to individuals. Libertarian scholars agree with Conly’s point about the

furtive nature of nudges but propose noninterference. According to the libertarian argument, not

only will government fail to approximate the best interest of individuals and succumb to

potentially nefarious influences, but the attempt in itself subverts individual autonomy and

decision-making capacities.

In response to the critique that policy makers will mistake preferences, nudge defenders

argue that in some cases individuals do not know what is in their best interest and would actually

prefer to forgo choosing. Pro-nudge scholars also dispute the claim that decision-making will be

undemocratic, suggesting various institutional designs and quality assurance standards to combat

bad actors. Even if the anti-paternalist is convinced by these practical solutions, they might hold

out on principle of protecting individual liberty and preventing government intervention. There

might be no resolution to this last disagreement between anti-paternalists and libertarian

paternalists as there is a fundamental disagreement about what increases welfare and the

approach taken to justify policy intervention. Anti-paternalists believe noninterference to be the

key to promoting welfare as it allows for the growth of maturity and self-reliance. Pro-libertarian

29
paternalists claim nudge style policies will not worsen decision making (as it is already biased)

and the cost of allowing individuals to fail is much greater than the benefit from interfering.

So far, the libertarian paternalist response to the argument that choice architecture will

decrease individual autonomy has been entirely negative. They suggest that choice architecture

and nudges does not infringe on autonomy. What is missing so far from this defense is a positive

demonstration of the relationship between libertarian paternalism and autonomy. Is it possible

that choice architecture promotes autonomy? When contemporary paternalists do make this

argument, it is only in passing and theoretically barren. Missing from their argument is a

definition of autonomy and a philosophically richer exploration of the relationship between

choice architecture and autonomy. That is exactly what I hope to provide in the next chapter,

before moving to a psychological and empirical test of this theory.

30
Chapter 3: How Choice Architecture Can Enhance Autonomy and Mitigate Inequality
3.1: Introduction
In the last chapter, I presented scholarly critiques aimed at the basic premises of

libertarian paternalism. These arguments attempt to deconstruct libertarian paternalism and

disprove its motivating principle – namely, influencing behavior to increase welfare. What I

offered in response were defenses of libertarian paternalism (hereafter “choice architecture”). In

this chapter, I plan to turn the tables and question the assumptions underlying these critiques. In

other words, I aim to critique their basic premises, in turn revealing important distinctions

needed in behavioral public policymaking. I lay bare the falsity in the critiques of choice

architecture by addressing two major assumptions: more choice is better and all choices are

created equal. The first assumption, evocative of Western individualism and capitalism, is being

challenged by a wealth of new behavioral science studies that demonstrate the fallibility of

human cognition. The emerging literature of choice overload reveals the negative consequences

of too much choice and too little resources. Secondly, I delineate the kinds of choices and policy

areas where individuals are most likely to struggle. Specifically, choices that are complex, rare,

and consequential present the best opportunities to nudge individuals for their benefit.

After pursuing a mostly deconstructive project, I then turn to the positive project of

demonstrating how choice architecture can enhance autonomy and mitigate inequality. In order

to address critics that argue choice architecture restricts autonomy, I begin by defining autonomy

– a philosophical effort many nudge-advocates sidestep. Autonomy is defined as a capacity to act

according to one’s desires and values using thought, reflection, and action. The ability to act,

however, is largely shaped by one’s external circumstances. Similar to choice architecture, which

considers content and context, relational autonomy judges how autonomous an individual is by

how free they are to further their life plan within their social environment. With the importance

31
of context in mind, I argue that autonomy can be enhanced or diminished by the structure of

choices. The negative impacts of bad choice architecture can also impact some groups of people

more than others. Thus, choice architecture holds the potential to increase autonomy and address

societal inequalities.

3.1.1 Assumption 1: More choice is better

One core tenet of Western, capitalistic culture is the inherent goodness of choice and, as

wealth and specialization increases, choices proliferate. To see this is true, one merely needs to

visit the cereal aisle in any grocery store in the United States and find 50-60 different brands of

cereal. Why do Western cultures have such a profound respect for choice? Much of the liberal

defense of free choice boils down to a deceptively simple syllogism: choice is a fundamental

component to autonomy and autonomy is essential for welfare, therefore the preservation of

choice is essential to welfare (Schwartz & Cheek, 2017). Therefore, any restriction on choice is

tantamount to a restriction on autonomy. Before I begin, I must clarify that I will not be arguing

against choice, per se. Freedom of choice is a luxury, one that many people around the world live

without. Freedom of choice allows individuals to express their unique identities, form core

values, and self-actualize (Markus & Schwartz, 2010). But could it be possible that, in some

cases, too much choice actually hinders autonomy? A growing body of behavioral science

literature demonstrates how too many choices can lead to “choice overload;” a cognitive

phenomenon that leads to be regret, dissatisfaction, paralysis, anxiety, and low self-esteem

(Schwartz and Cheek, 2017, Schwartz 2004). At some point, the larger the choice “set” (or

number of options), the less capable individuals are of processing the additional information in

light of their known preferences – they become cognitively overloaded (Peter et al. 2010). If this

is true, then the syllogism is incorrect. Rather than promoting autonomy, the abundance of

choice prevents individuals from acting and negatively effects their overall welfare.

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 I explore the empirical evidence for choice overload in the second experiment, but for

now I will briefly sketch the theory and consequences of choice overload. In a groundbreaking

set of experiments, Iyengar and Lepper (2000) discovered that while individuals are initially

attracted to more choices, they are more satisfied and motivated when offered less choice. In

their simplest study, Iyengar and Lepper (2000) displayed 2 booths for jam tasting: one with 6

jam flavors and another with 24 jam flavors. While participants were more attracted to the booth

with 24 jam flavors, they were more likely to purchase jam after sampling from 6 flavors.

Initially, more choice seems attractive because it affords greater opportunities for preference

satisfaction and a greater sense of control and autonomy. But when presented with a larger

number of choices, individuals experience lower satisfaction and motivation to engage in the

decision. For a more serious example, one study reported that 65% of respondents indicated they

would want to choose their own treatment if diagnosed with cancer, though only 12% of cancer

patients actually want to do so (Schwartz 2004). It appears that what individuals want is respect

of their autonomy, not actual autonomy.

Consider the increasing number of services that collect consumer’s preferences but make

their purchase decisions for them. For example, millions of people in the U.S. pay for meal kit

delivery services so they can cook without the hassle of choosing a recipe and going grocery

shopping. In cases like these, where individuals might be happy with whatever they get, the

imposition of choice could be more paternalistic than if the decision were made for them

(Sunstein 2019, 81). Paradoxically, choosing to have less choice may grant more agency to the

individual than forcing them to choose in circumstances where they feel ill-equipped or

indifferent. Some critics object to choice architecture, or nudging, on the grounds that it reduces

individual access to choice. But this criticism rests on the universal assumption that more choice

33
is better. While choice is certainly an important component of autonomy and welfare, there is

evidence that too much choice diminishes autonomy and welfare.

3.1.2 Assumption 2: All Choices Are Created Equal

When scholars argue choice architecture is harmful to individual welfare because it

restricts choice, there is a critical assumption being made about the nature of choices themselves.

Choices vary along innumerable dimensions and these distinctions are vitally important to the

defense of choice architecture. As an example, the decision about what to have for lunch differs

in significant ways from the decision to enroll in health insurance. First, I have had the

opportunity to develop preferences for flavor and texture over time in ways that I have not

developed preferences for coverage and costs. Part of the reason why is that I face the choice of

what to have for lunch every day. The only time people typically think about health insurance is

when they begin a job or lose their job. In other words, one difference between the two choices is

frequency; the former choice is frequent, and the latter choice is rare. This frequency allows for

the development of clear preferences as one can explore the consequences of their choices. I

might be acutely aware of the consequences of choosing a cookie over an apple but be entirely

unaware of the consequences involved in different health insurance options. Therefore, the

additional distinctions between these two choices is complexity and impact. The psychological

and financial resources expended in making complex healthcare decisions far exceeds the

resources necessary in deciding what to have for lunch; the former is hard; the latter is easy.

Finally, the consequences of choosing a cookie over an apple are short-term, whereas the

consequences of health insurance are long-term. I might regret eating the cookie as I step on the

scale and choose differently the next day, but I might regret what health insurance plan I chose as

I try and find a provider for a certain condition or face an enormous hospital bill. The

comparison between choosing what to have for lunch and what health insurance plan to enroll in

34
might seem meaningless, but only by exploring these kinds of differences can we identify where

choice architecture will have the most positive impact.

A core underlying assumption of the “choice equals autonomy” syllogism is that

individuals know their preferences. If anyone else decided for them, they would be worse off

than if they were given the opportunity to decide for themselves. But in the settings I focus on

here (where the decision is complex, rare, and consequential), sometimes individuals do not

know what is best. In fact, the decisions people make in these circumstances could be

detrimental for their autonomy and welfare. Modeling a health insurance exchange, researchers

asked respondents to select the move cost-effective policy and found that respondents who were

presented with a default performed better than respondents left to their own devices (Johnson et

al. 2013). Calculating cost-effectiveness for a health insurance plan is complex, especially the

first time, and most respondents tended to overweight deductibles and underweight premiums

(Johnson et al. 2013). When individuals are unsure of their preferences, they are more likely to

utilize mental shortcuts (like cost) to compensate, leading to poorer choice outcomes.

When coupled with the effects of choice overload, these kinds of decisions are prime

examples of when the “choice increases autonomy” assumption fails. While the empirical results

for the choice overload hypothesis are mixed in cases where the decision is mundane (e.g. what

cereal to buy), the results are clear in cases where the decision is complex and individuals are

uncertain of their preferences (Schwartz & Cheek, 2017). A meta-analysis of the literature finds

consistent negative effects of choice paralysis and overload when individuals are presented with

choices with the following features: high task difficulty, greater choice-set complexity, higher

preference uncertainty and decision goal feasibility (Chernev et al., 2014). In other words, the

35
effects of choice overload are exacerbated in cases when the decision is complex, rare, and

consequential.

When we compare the nature of choices, it becomes clear that not all choices are created

equal. Although the discussion above seems tedious, granularity is necessary to move the

argument beyond the abstract into the concrete. I am interested in choices that are complex, rare,

resource intensive, and consequential (i.e. finance and health care) because they are ideal

candidates for choice architecture. When stakes are high, knowledge is low, and cognitive

pitfalls abound, nudges present an effective solution to increase welfare and autonomy. The

relationship between choice architecture and welfare is well documented, but for the rest of this

chapter (and the rest of my dissertation) I concentrate on demonstrating the positive relationship

between choice architecture and autonomy.

3.2: How Choice Architecture can Enhance Autonomy

My central thesis is that, in certain contexts, choice architecture can enhance individual

autonomy. Other behavioral scientists have made similar arguments, but they do so without

specifying what it means to be autonomous. They equate autonomy with freeing up time and

resources or with a feeling, like relief. If choice architecture is to withstand philosophical

critique, however, a richer definition of autonomy is needed. After exploring autonomy from a

theoretical perspective, I am on firmer ground to argue that choice architecture can increase

autonomy.

3.2.1 What Does Autonomy Mean?

Autonomy is generally thought of as the capacity to shape, critically reflect, and act on

one’s values, desires, and life goals. Autonomy can be internal and individualistic, in the sense

that one’s circumstances are heteronomous to one’s ability to be autonomous (Darwall 2006,

Dworkin 1998, Benson 1994, Feinberg 1986). This version of autonomy is often postulated as an
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ideal or abstraction of what autonomy “should” be, in order to provide a foundation for debates

about social policy, political institutions, and rights. Necessarily, this ideal version of autonomy

sidesteps considerations about the influence of context on individual autonomy in a practical

sense (Christman 2001, 188). This abstraction becomes less constructive when we consider

autonomy in applied settings, where environmental constraints are inevitable. If we concede this

point, the question becomes which external circumstances restrict or enhance autonomy in the

real world?

Another set of scholars defend a relational, constructivist approach to autonomy which

acknowledges the need for internal reflection and self-determination but emphasizes the role of

one’s environment as critical to the expression of autonomy (Garnett 2013, Westlund 2009,

Oshana 1998, 2003, Govier 1993). I adopt a relational definition of autonomy when I discuss the

benefits of choice architecture because they share a congruent understanding of the power of

one’s environment on individual decision-making. According to relational autonomy scholars,

any account of autonomy that ignores an individual’s environment, particularly their social

status, ignores important ways that individuals can be free or unfree.

Consider the example of the voluntary, happy slave. The person who opts into slavery

could consider himself fully autonomous at the time he entered slavery and once a slave, he

might be perfectly happy with his condition and consider himself fully autonomous. However,

his condition in relation to his master and others in society is to be without the ability to direct

his life; “being a slave means that how he shall live is no longer up to him” (Oshana 1998, 87).

Regardless of “subjective psychological characteristics” required for autonomy, “there are

objective social criteria according to which we judge someone as autonomous” (Oshana 1998,

85). In order to be autonomous, individuals must have the social standing and respect of others to

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act upon their personal goals and desires. In other words, our ability to be autonomous is

partially dependent on others perceiving us to be so. Autonomy is as much a state of mind as it is

a social condition.

Certain notions of autonomy, like interdependent agency, recognize that one’s life plan

could be in large part influenced by others (Iyengar and Lepper 1999, Kim and Markus 1999).

For example, a college student whose goal is to get all A’s could be heavily influenced by her

parent’s worldview that academic success is important. She may be reacting to the desires of

others in her academic pursuits, but she is incorporating them into a plan of action entirely her

own. In this case, the student is not being forced to get all A’s (assuming the parents are not

enforcing contingencies on her success), but is instead adopting a shared value, one passed on to

her by her parents. Shared, communal values define our environment in many ways and adopting

them as our own does not exclude us from also being autonomous individuals.

Relational autonomy presents a holistic account of autonomy that recognizes both the

impact of external circumstances and one’s internal capacity. The individual must have the

requisite capacities for critical reflection, but they must also have a certain level of self-worth,

self-trust, and self-respect to act on their values, desires, and goals. An individual cannot act on

their innermost goals and values if they do not see themselves as valuable or their goals as

worthy pursuits. I can highly value education and possess the means to further my education, and

yet fail to pursue it because I do not value myself or trust that I will succeed. According to Trudy

Govier, trust is a necessary component to self-worth and the capacity to act; “to reflect on one’s

beliefs and desires, to work out a resolution in cases in which they conflict, it is necessary to

view oneself as having worthy desires, competently founded beliefs, and the cognitive and moral

capacity to make good judgments and implement decisions” (1993, 108). In other words, to feel

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self-respect and self-worth, you need to be able to trust your own self-evaluation. Thus, there

appear to be at least two separate conditions necessary for the richest experience of autonomy;

the internal feeling and knowledge of one’s autonomy and the ability to outwardly express one’s

autonomy. Both conditions cannot be met and understood without reference to the contextual

factors affecting autonomy. Relational autonomy is a more inclusive understanding of autonomy,

one that captures the totality of its experience by incorporating aspects of an individual’s

environment, internal capacities, and psychological confidence.

The traditional narrative of autonomy views external constraints as antithetical to

autonomy. Schwartz and Cheek (2017) posit that not only is an abundance of choice antithetical

to autonomy, but restrictions on choice potentially enhance autonomy. Imposed external

constraints and established regulatory bodies can open up space for individuals to act

autonomously. Traffic laws, for example, “provide, through stability and predictability, positive

resources that enhance autonomy” (in this case, my ability to move freely and get to where I

want to go) (May 1994, 134). In the next section I argue that choice architecture can serve

exactly this function by imposing limits on the sheer number of choices and improving choice

navigability.

3.2.2 Enhancing Autonomy

Many critics of choice architecture assume there is a positive relationship between choice

and autonomy. This argument assumes that more choice is equivalent to a greater capacity to act

autonomously. However, as discussed above, greater choice can have the opposite effect; too

much choice can be debilitating and paralyzing, leading to suboptimal decisions or no decision at

all. By reframing, limiting, or nudging choice, policy makers can help individuals by avoiding

the negative psychological effects of choice overload and by encouraging sound decision-

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making. In the short term, nudging policies relieve individuals of complex and cognitively

overwhelming decisions, freeing up more cognitive bandwidth to consider more fulfilling

choices.

In addition to cognitive overload, an abundance of choice in certain contexts could

negatively impact self-trust and self-esteem, both critical prerequisites for autonomy. If I feel

incapable or uncertain about my personal financial or medical decisions, I might be more likely

to question my decision-making capacity in similarly complex domains of my life. For example,

if I feel unconfident about my retirement investment decisions, I might be equally unconfident

about my decision to refinance my mortgage. Absent any guidance, I might be more likely to

make a suboptimal decision about my retirement and my home financing or avoid thinking about

one in favor of the other. The short-term benefits of choice architecture on autonomy are

primarily psychological – avoiding the damaging effects of uncertainty. As discussed previously,

more choice can actually impede autonomy and cause feelings of paralysis and regret. In

experimental settings, studies show that increasing the number of choices is associated with

“lower chooser confidence and greater experiences of negative effect; that is, people choosing

from more extensive choice sets are less satisfied with their decision outcomes” and more likely

to regret their choices (Botti and Iyengar 2006, 26). Regret is a powerful negative, “sticky”

emotion and one that could negatively impact confidence and self-esteem.

Besides the negative psychological influence, choice overload can also prevent individual

action, as individuals would rather avoid choosing than attempt to sift through all their options.

In a 2004 study, Iyengar, Jiang, and Huberman found that as the number of funds available for

401(k) investment increased, participation in a 401(k) decreased. Regardless of incentives like

employer matching contributions and the option to invest in high-growth equities, “findings

40
show that employees who are eligible for ‘defined-contribution’ plans are more likely to opt out

when they are offered increasing numbers of fund options” (Iyengar, Jiang, and Huberman

2004). The consequences of forgoing participation in a retirement plan, even just one year, can

equate to thousands of dollars in retirement savings. The domain of retirement is a perfect

example of the potential long-term effects of choice architecture on autonomy. If individuals are

less likely to enroll in retirement plans as the choices increase, choice architecture can be used to

increase enrollment and increase retirement savings.

As mentioned previously, acting autonomously includes an internal capacity as well as an

external ability to control one’s circumstances. Financial security in retirement is about more

than status, it is about survival. A report by the National Bureau of Economic Research (NBER)

finds that adults who turned 70 in 1992 will incur an average of $122,000 in out-of-pocket

medical spending over the remainder of their lives (Jones et al. 2018). Another study by the

NBER reports that in the last year of life, individuals spend the most on nursing home and

hospital expenditures, followed by insurance, prescription drugs, and home health care

(Marshall, McGarry, and Skinner 2010). Small tweaks in the decision-making environment early

on can increase individual’s financial resources and benefit their health post-retirement.

Counterintuitively, limiting choice in the short term can lead to an increased ability to choose

later in life. Greater financial resources in retirement can grant individuals greater autonomy and

control of their life.

Ultimately, the goal of nudging is “to promote navigability and to increase people’s

capacity for agency and autonomy” in the short and long term (Sunstein 2019, 33). Again,

autonomy is not guaranteed by an abundance of choice and might even be promoted by limiting

choice. If there were no impositions on choice, like a world without traffic laws, our time would

41
be entirely spent on mundane decisions. Nudge-style policymaking creates choice structure,

much like traffic laws, so that individuals can pursue a richer, more meaningful life.

3.2.3: How Choice Architecture can Mitigate Inequality

Choice architecture could increase autonomy for everyone in society but is also more

likely to benefit some groups more than others. Decisions that are complex, rare, consequential,

and resource depleting are the kind of decisions likely to adversely affect some groups in society

more than others. If I have the time, education, or means to thoughtfully consider a complex

decision, I am more likely to reap the benefits. Conversely, if I lack the time, education, or

means to thoughtfully consider all the options available to me, I am more likely to forego

important benefits. Resources like time, education, money, and social connections are unequally

distributed. If choice architecture can close the gap on some of these resource disparities, it can

help close the gap on outcome disparities as well. In a country where poor and minority groups

fall well behind more privileged classes in economic prosperity, educational achievement, and

health status, choice architecture promises one method for mitigating inequalities.

Absent any intervention, individuals facing complex, rare, and consequential decisions

experience cognitive overload and, having little information, make suboptimal choices, leaving

them less well-off. Just as every decision is not the same, every decision-maker is not the same.

Privileged individuals will have an easier time overcoming the barriers of cognitive overload and

low information because of their educational, economic, and social resources. A perfect example

to illustrate this inequity is tax filing. Tax filing is not rare (it happens once a year), but it is

complex (with multiple forms requiring documentation), and consequential (how you file could

result in a substantial return or penalty). In 2017, the average tax accountant charged over $150

just to prepare and file a Form 1040 and state tax return (National Society of Accountants). If

42
your filing circumstances are more complex and require special forms, individuals and families

can end up paying over $500 for tax assistance. Wealthier individuals can either afford to pay a

tax accountant, have an education that helps them interpret filing forms, or perhaps know

someone in their social circle who can help them with taxes. Not only do these kinds of policies

worsen individual outcomes, but they also threaten to exacerbate existing inequalities.

The example I just discussed highlights material inequalities, which are transparent. What

about hidden inequities that intensify these material outcomes? Being an upper-class individual

comes with a certain level of security for the reasons mentioned above. More privileged classes

have resources to fall back on in a crisis, meaning they experience a certain level of confidence

that things will work themselves out. Mullainathan and Shafir refer to this security as cognitive

“slack,” or, in other words, “room for failure” (2013, 83). Conversely, individuals on the

opposite socioeconomic spectrum lack secure resources to fall back on, so they must always

remain vigilant lest their resources are depleted. Individuals in poverty experience less freedom

to fail, causing anxiety and distress, and their limited resources constrain their behavior and

autonomy in meaningful ways. Research shows that individuals with lower socioeconomic status

experience a lower sense of control and are more deferential to the needs of others over their

own, demonstrating the ways in which the psychology of poverty affects behavior and individual

autonomy (Stephens, Fryberg, and Markus 2011, Kraus, Piff, and Keltner 2009).

One prominent study tested the effect of financial urgency on cognition and discovered

that poor individuals performed worse than wealthy individuals. The anxiety induced by

financial scarcity caused the poorer individuals to face greater barriers in cognition; “being poor

means coping not just with a shortfall of money, but also with a concurrent shortfall of cognitive

resources” (Material et al. 2013, 980). To ensure the effects were related to the circumstance and

43
not the individual, the researchers conducted the same test on farmers at different points in the

growing season and found the same results (the same farmer who performed poorly in the pre-

harvest time period performed better in the post-harvest time period). Cognitive capacity is itself

a limited resource, one that can be scarcer for individuals with low socioeconomic status. When

individuals experience scarcity, it taxes their cognitive “bandwidth,” making it difficult to pay

attention, deliberate, and resist temptation (Mullainathan and Shafir 2013, 41-42). Poverty

becomes a vicious cycle because the poor are living with little room for error and a persistent

cognitive bandwidth tax, meaning that “an initial scarcity is compounded by behaviors that

magnify it” (Mullainathan and Shafir 2013, 126). People in poverty pay a high bandwidth tax,

making them more likely to commit the kind of decision-making errors that will perpetuate

poverty. The positive implication of the scarcity research is that the cognitive pitfalls of those in

poverty are not inherent, but contextual (Mullainathan and Shafir 2013, 144-145).

Our cultural narrative of the causes of poverty also reinforces that proliferation of choice

is a good thing. There is a common understanding in Western culture that hard work will always

lead to rewards. Thus, your value in society is measured by your achievements, your social

standing, and your wealth. If you are poor, the implication is that you did not work hard enough

or choice wisely. Material success and social status become a reflection of one’s individual

abilities and worth, rather than their circumstances. Poverty causes individuals to live with a

deep sense of shame because they attribute their failures to personal faults. Your “failure”

becomes a direct reflection of your lack of cognitive ability and will power. When we examine

individual experiences of poverty, we understand that poverty is not just a material condition, but

a psychological and social one characterized by “a lack of voice, disrespect, humiliation and

reduced dignity and self-esteem” (Jo 2013, 516). If a sense of self-worth is a key component to

44
acting autonomously, as I argue above, then those in poverty face an internal roadblock to

achieving autonomy to the fullest extent.

A key assumption of the Western belief that success is directly proportionate to good

decision-making is that choice is distributed equally. A powerful example of the disparity of

choice is Hurricane Katrina. One study examined the role of choice in the experiences of

working-class blacks and middle-class whites and discovered that the white respondents were

more likely to construe their actions in terms of choice, while black survivors described the

necessity to adjust to their environment (because they lacked the material resources to evacuate).

Outside observers were quick to conclude that those who did not evacuate “chose” to stay, “but

for many impoverished New Orleans residents, nothing about the events of Katrina was a matter

of choice” (Markus and Schwartz 2010, 350). Cultural frames which place an emphasis on

individual choice and ignore social circumstance contribute to the stigmatization of poor and

minority groups, perfectly illustrating the central tension between individualism on the one hand

and social contextualism on the other.

Policies likely to cause cognitive overload and exacerbate resource gaps are perfect

opportunities for choice architecture. Using choice architecture to combat inequality is nothing

new. The Behavioral Insights Team has conducted dozens of studies and implemented effective

strategies to reduce the gender pay gap, improve individual budgeting, improve school

attendance for disadvantaged children, increase the rate of college application for low-income

students, and much more. The use of behavioral interventions to combat poverty is increasing at

the international, national, and sub-national levels. Behavioral science succeeds at measuring

inequity, understanding the decision-making process underlying the inequity, and targeting

policies to nudge choosers in a way that addresses the inequity. Additionally, implementing

45
choice architecture in the areas where inequities are most prevalent benefits everyone – not just

those few with the resources necessary to choose optimally.

Perhaps it has become apparent that the rhetoric of poverty itself changes when we

explore the issue through the lens of behavioral science. The traditional rhetoric around poverty

in the United Sates is fraught with implicit and explicit biases. Poor people are seen as lesser

because they are perceived as lazy, selfish, and undeserving. Some of these negative stereotypes

stem from racial biases, as there has been a longstanding association between poverty and

minority status in this country. Debates about welfare policy are typically framed in a way that

places blame on the poor and sees them as a problem to be dealt with or people to be

“disciplined” (Soss et al. 2011). This type of rhetoric not only promotes negative stereotyping

and mistreatment, but also negatively impacts the self-perception of disadvantaged individuals.

There is plenty of evidence to show that stereotype threat and poverty negatively effects self-

esteem, self-worth, cognitive function, and can become a self-fulfilling prophecy (Mullainathan

and Shafir 2013, Jo 2013, Beilock et al. 2007, Croizet and Claire 1998, Steele 1997).

In contrast, by understanding the role of cognition and behavior in decision-making we

can acknowledge the universality of cognitive biases. Instead of blaming poor people, we can

recognize that “the poor are less capable not because of inherent traits, but because the very

context of poverty imposes load and impedes cognitive capacity” (Material et al. 2014, 980).

Choice architecture, with its emphasis on behavioral scientific evidence, can offer a rhetorical

framework to combat ingrained negative stigmas and reduce shame. If cognitive roadblocks are

simply a fact of human cognition, which are exaggerated by scarcity, there becomes nothing

inherently deficient about poorer individuals. When we recognize that cognitive faults are “errors

that have been visited upon us rather than chosen, our treatment of frailty in others should be

46
governed not by disdain but by sympathy and a recognition that help is due” (Conly 2013, 188).

By drawing upon science that demonstrates the universality of cognitive biases, policymakers

can replace outdated rhetoric based on anecdotal evaluations and prejudice. Cognitive science

can be a tool to emphasis our similarities, instead of our differences. When we approach policy

in this way, we can positively impact both material circumstances and perceptions of the most

vulnerable populations.3

3.3 Conclusion
The purpose of this chapter was to present my theory for how choice architecture can

enhance autonomy and mitigate inequality, especially in cases when the decision is complex,

resource intensive, and rare. First, I argue that traditional assumptions about choice and

autonomy are incorrect. More choice can be overwhelming and debilitating, particularly in cases

where information is low and stakes are high. People do not want to make mistakes, they simply

might lack the resources (i.e. knowledge, time, money, etc.) to make an informed decision.

Second, I argue that choice architecture not only mitigates these hurdles but can also have a

positive effect on autonomy in the long run for both the individual and society. On the individual

level, choice architecture promotes decision-making that will increase resources for the future

(e.g. defaults for retirement plans). On the societal level, choice architecture (and behavioral

3
Policymakers will need to be aware when implementing choice architecture that they do not
inadvertently create a sense of exclusion. Systematic and biased restrictions of choice have been
shown to decrease self-worth for disadvantaged communities. Researchers studying access to
loans and credit found that repeated denials of choice had a “cumulative debilitation effect” on
minority and poor individuals that results in “deleterious impacts to self-esteem, self-efficacy,
self-autonomy, and other facets of self” (Bone, Christensen, and Williams 2014, 453).
Policymakers need to be aware of the ways that institutions and policies can trigger negative
reactions in these disadvantaged groups.

47
science/ evidence-based policy generally) offers up a new way of conceptualizing disadvantage

and combating harmful stereotypes.

My next two chapters will attempt to bridge the gap between the theoretical and

empirical. I design two experiments to test my theory that choice architecture can positively

impact autonomy. But how does one measure autonomy? I do not think there is one direct way of

measuring autonomy because it is an abstract concept but there might be ways to measure the

extent to which an individual possesses the conditions necessary to act autonomously. By

conditions, I mean external conditions (like power, money, resources, etc.) or internal conditions

(like self-confidence and intelligence). If I were to study the external conditions for autonomy, I

might gather data on resources like income, social networks, and education. A highly educated

person with a powerful job and steady income is in a better position to act upon their innermost

goals and desires than perhaps someone in a low-paying non-union job at the mercy of their

boss. In the latter case, the individual has less tools at their disposal to achieve their highest

potential.

Instead, I chose to focus on the internal conditions for autonomy. Besides asking a person

if they are autonomous, there are other ways to get at an internal capacity for autonomy. One

way might be to conduct in depth interviews with individuals, asking them questions about

different aspects of their life, their sense of control, optimism, and self-knowledge. I have chosen

to focus specifically on individual self-confidence and self-worth as a condition for acting

autonomously. In order to test this in an experimental setting, I assume that an individual’s

overall sense of self-confidence is partly a cumulation of feelings of confidence. If participants

are meant to feel more confident and competent, it might increase their self-confidence,

48
increasing their ability to act autonomously. The overarching goal is to use those feelings as a

partial indicator of autonomy and test the effects of choice architecture on those feelings.

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Chapter 4: Experiment 1 – Effect of Choice Architecture on Subjective Responses
4.1 Introduction
As discussed previously, one of the major assumptions underlying the critique of nudging

is a traditional commitment to choice as a prerequisite for autonomy and autonomy as a

prerequisite for welfare (Schwartz and Cheek 2017). Critics worry that manipulating the choice

environment will negatively impact individual autonomy and therefore, welfare. Nudge

supporters justify changes to an individual’s choice environment for the opposite reason. They

argue that, in many cases, welfare decreases when individuals are left to their own devices and

there is plenty of empirical evidence to support this claim (Thaler and Sunstein 2008). While the

link between choice architecture and improved welfare is supported by empirical study, the

empirical relationship between choice architecture and autonomy is less clear.

When supporters of behaviorally informed policy-making do reference autonomy, they

do so in passing and without defining autonomy or specifying why it is important. According to

Sunstein, choice architecture can “open up time and resources for more pressing matters” (2014,

21). For example, imagine a single parent having to choose to allocate their time between

exploring the differences between Medicaid plans and meal planning for their kids for the week.

If they were assisted in making the first choice (through a nudge or other kind of choice

architecture), they would have more time to plan dinners for the week and decide how much to

spend on groceries (which in most cases will be the more immediate concern). The assumption

Sunstein is making here is that some choices can be a burden, taking time and cognitive space

away from decisions that are more important to us. When this burden is removed, we are likely

to feel relieved and be freed up to exercise autonomy in more meaningful areas of our lives.

Here, Sunstein implies that our ability to act autonomously is linked to time (as a measure of our

decision-making flexibility). Too much choice and too many decisions can tax vital resources

50
like time and attention, hindering one’s decision-making abilities (as we explored in the literature

on choice overload and scarcity in the previous chapter).

Besides theoretical arguments, however, there is no empirical evidence linking choice

architecture to individual autonomy. Part of the problem is the methodological complexity

involved in measuring “autonomy,” as discussed at the end of the previous chapter. Sunstein

seems to equate autonomy with time and resources. In this study, I attempt to study the

relationship between choice architecture and autonomy by measuring feelings of confidence and

competence. I design a survey experiment that measures individual’s reactions to a complex

decision – choosing among multiple options for health insurance. What I find is that there is a

significant relationship between choice environment and respondent’s feelings of competence

and confidence. Compared to individuals who experienced complete freedom of choice,

participants who experienced a restriction on choice (like a default or no choice) felt more

confident about the outcome and more competent about the subject matter. I want to be clear

here. I am not implying that displaying high levels of self-confidence means that a person is

autonomous. Instead, these feelings can be seen as prerequisites or conditions for acting

autonomously. Counterintuitively, providing restrictions on choice can enhance these feelings

and so potentially increase by capacity to be autonomous.

4.2 Theory
The statements made by pro-nudgers suggest that there is a positive relationship between

choice architecture and autonomy. Their hypothesis is that providing guidance (or restrictions)

on choice can increase individual autonomy. While there is a lack of empirical evidence to

demonstrate this positive relationship, there is a wealth of literature on the negative relationship

between too much choice and autonomy. According to the literature on choice overload, when

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individuals are presented with a large choice set, they experience cognitive overload, choice

paralysis, and subsequently feel unsatisfied, regretful, fatigued, and confused (Iyengar, Wells,

Schwartz 2006, Iyengar and Lepper 2000). Not only does too much choice have a paralyzing

effect, making decision-making more difficult, but choice overload also negatively impacts

material outcomes. Although the effects of choice overload are mixed, they are particularly

significant in cases when the decision-making environment is complex and individual

preferences are unclear, which are the policy areas I am most interested in here (Chernev,

Bockenholt, and Goodman 2014). Several studies have shown that increasing choices for health

insurance or 401K plans leads to poorer decision-making and decreased enrollment (Johnson et

al. 2013, Iyengar, Jiang, and Huberman 2004). The question at hand is whether there is a positive

relationship between restricting choice and expressions of autonomy.

As stated in the previous chapter, I argue that acting autonomously implies a person has

a baseline level of self-worth and self-trust (Govier 1993). An individual can possess the ability

to envision a future for themselves, one they have spent a great deal of time thinking about, and

yet fail to act upon it because they are plagued by self-doubts. One cannot act on their innermost

goals and values if they do not see themselves as valuable or their goals as worthy pursuits.

Conversely, to act upon one’s goals and desires requires a belief in one’s capacity and a feeling

that their goals are worthwhile. In this study, I rely on the notion that self-confidence is an

important condition for the exercise of autonomy and that feeling confident and competent adds

to one’s overall level of self-confidence. Again, I am not making the claim that feeling confident

is the same as being autonomous, but that it is an important condition for acting autonomously.

The survey questions used in this experiment require individuals to evaluate their level of

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confidence and competence as it related to their choice and their overall ability to respond to

complex financial decisions.

To better understand the relationship between choice architecture and autonomy, I have

chosen to manipulate the choice environment for health insurance plan options. Health insurance

is a particularly effective choice because choosing a health insurance plan is complex (with

several factors to consider), rare (most individuals do not face this choice often), prone to lots of

cognitive biases (prioritizing immediate cost over care and coverage), and consequential (what

plan is chosen can have significant consequences). Health insurance and medical decision-

making in general is a popular area for choice architecture implementation, especially given the

rise in health care costs (Korobkin 2014, Quigley 2013, Johnson et al. 2013, Thaler and Sunstein

2008). Previous research indicates that consumers make better choices (i.e. select the most cost-

effective health insurance plan for them), when nudged towards that choice (Johnson et al.

2013). Although previous research shows the power of nudging on consumer behavior, it does

not measure the subjective response of the consumers after they are enrolled in a plan. How do

the individuals feel after making their decision?

Independent variable: Level of choice (Unlimited choice, Nudged choice, or No choice)

My independent variable is the choice prompt. Individuals were presented with a prompt

that states that they are starting a new job and must select a health insurance plan (a scenario

most working adults have experienced). Participants in the control condition were asked to select

a health insurance plan from a list of four options without any restrictions or guidance.

Participants in the first treatment condition experienced a “nudge.” Individuals in this condition

were prompted to select one of the four options, but they were still free to choose whatever plan

they wished. Participants in the second treatment condition received the “coercive” treatment.

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Individuals in this group were not given a choice of which health insurance plan to enroll in and

were told they will automatically be enrolled in one of the four.

Dependent Variable: Feelings scale (a composite measure demonstrating overall level of

confidence and competence)

My dependent variable is the affective response of the participant, as measured by a

“feelings scale” which includes barometers for confidence and competence as it relates to the

decision at hand and future complex financial health decisions. The feelings scale generates a

composite number (including questions 3-5, and 7). For a complete transcript of the survey

experiment, please see Appendix A.

First, I predict that participants who are given no guidance and forced to choose will feel

less confident and competent compared to participants in the two treatment groups because of the

amount of information they are being asked to process. Without guidance, individuals might feel

indecisive and uncertain, especially considering their foregone choices. As a result, I predict they

will feel less confident in their ultimate choice.

Second, I predict that participants who are nudged towards a particular option will feel

more confident and competent relative to those without the nudge. Given health insurance is a

complex, significant, and rare choice, individuals are unlikely to be fully informed and will

welcome any guidance in selecting a plan. When prompted to make their decision, individuals in

the “nudge” condition are told that an impartial, third-party firm has already assessed their needs

and lifestyle choice (to avoid any potential mistrust from the employer suggesting a certain plan),

and suggest they choose one of the four options. They are also told that they do not have to

choose the pre-selected plan and are free to go against the guidance of the third-party firm. I

54
argue that participants in the nudge condition are more likely to feel confident about their

selection because the research has already been done for them. Additionally, there might be an

implicit trust placed in the expertise of this third-party firm that would lead them to feel more

confident.

Third, I predict that participants who are given no choice at all will also feel confident

because the selection will be made for them based on criteria assessed by a neutral third party. If

they have a novice, or even intermediate, understanding of the components of health insurance,

then they would feel more confident in the choice made by an expert. As suggested by Conly

(2013), they will also feel relieved because a difficult and significant choice has been taken off

their plate.

Finally, I predict that participants who were not allowed to make a choice (no choice

condition) will feel less confident, comfortable, and relieved in their choice compared to

participants who are nudged (nudge choice condition). Although both treatments offer guidance

to the individual by an informed third party and alleviate a complex and difficult choice,

individuals might nevertheless feel more comfortable, confident, and relieved when they feel

they have played an active role in choosing their health insurance plan. While the first treatment

nudges participants toward one of the options, they remain free to choose the alternative option if

they judge it is a better fit for them. The added element of freedom of choice might solidify their

selection in their minds, adding to their subsequent feelings of confidence and competence.

My expectations can be summarized in one main hypothesis. I predict that the feelings

scale value will increase across the conditions in order. In other words, I expect that participants

in the forced choice condition (control) will feel significantly less confident and competent

relative to participants in the no choice condition, who will feel significantly less confident and

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competent relative to participants in the nudged choice condition. Thus, I expect to find that

participants in the nudged choice condition will report the highest levels of confidence and

competence, as measured by the feelings scale.

Hypothesis 1: Participants will feel significantly more confident and competent across

the experimental conditions in the following order: forced choice < no choice < nudged

choice.

4.3 Experimental Design and Methods

In order to test my hypotheses, I designed a survey experiment in which participants were

prompted with a hypothetical scenario and then asked a series of questions in response. I

recruited subjects using Amazon’s Mechanical Turk platform. I limited my sample to those

participants living in the United States over the age of 18. Those who agreed to participate

received $.50 in compensation and the survey experiment took an average of 10 minutes to

complete. To ensure the integrity and transparency of my study, I pre-registered my hypotheses

online (aspredicted.org). The survey was posted on the MTurk platform for four months and 357

MTurk workers participated. Of this sample, ages ranged from 21-66 (with a mean of 37 and a

standard deviation of 11), 50% identified as Female (N=164), 76% identified as White (N=241),

and most of the participants indicated they have less than a 4-year college degree (45%,

N=146).4 When asked how often they think about health insurance, the majority (58%)

responded “not very often” or “not at all” (N=187). When asked how much research they have

4
Analysis of variance (ANOVA) tests were conducted for each demographic variable and the
results were insignificant, indicating that there is not a statistical difference between the
demographic means for each treatment condition.

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done on health insurance, the majority (62%) responded “extensive research” or “some research”

(N=199).

Upon agreeing to participate, individuals were presented with the same hypothetical

scenario. They were asked to imagine they had just started a new job and needed to enroll in a

health insurance plan. All participants were presented with the same four health insurance plans

(the order of the plans was randomized). Participants were then randomly selected to receive one

of three possible prompts. Individuals in the control condition were simple asked to choose

between the four plans. Individuals in the nudge treatment condition were asked to choose a plan

after being nudged toward one particular choice (also randomized). Individuals in the no choice

condition did not have an opportunity to select a plan and were told that a plan was chosen on

their behalf (also randomized). Complete vignettes can be found in Appendix A. After the

experiment, participants were asked to fill out a survey collecting information on their affect,

knowledge, and demographics. The affect responses form what I will refer to as the “feelings

scale.” It is a composite measure including questions regarding the individual’s perceived

competence, confidence, and capability as related to the task and future significant health care

decisions (see questions 3-5, and 7 in Appendix A). For each question included in the feelings

scale, participants are asked to evaluate how much they agree or disagree with a statement on a

scale of 1 (Strongly disagree) to 5 (Strongly agree). Higher values of the “feelings scale” indicate

a higher level of individual confidence and competence. Values ranged from 5-20 with a mean of

17 (and a standard deviation of 3). In order to test whether the inclusion of these questions in the

composite variable are appropriate and covariate, I checked the Cronbach Alpha score, which is

.88. The high value of the Cronbach Alpha score leads me to conclude that the questions

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included in the dependent variable, feelings scale, are closely related and can be safely

combined. Table 1 displays the N for each treatment group.

Table 1. Number of subjects per treatment condition

Control Treatment 1 Treatment 2

(Forced choice) (Nudged choice) (No choice)

159 102 96

4.4 Results
In order to test my hypothesis, I conducted multiple t-tests to calculate the significance of

variation in means between my control and two treatment groups. My first expectation was that

participants who were forced to choose (control condition) would express significantly less

confidence and competence than participants in both treatment groups. The difference between

the control group and two treatment groups (combined) is statistically significant (with a

difference of 1.04, p = 0.0007 in a one-tailed test). As expected, the participants who experienced

some sort of alteration in the choice environment (nudged choice or no choice) expressed a

higher level of confidence and competence than participants in the control condition, who were

presented four health care policy options and forced to choose.

Second, I expected that individuals in the nudged choice condition would feel

significantly more confident and competent than individuals who were offered no guidance and

forced to choose (control condition). As expected, the difference in the feelings scale means

between the forced choice group and the suggested choice group is statistically significant (with

a difference of 0.85, p = 0.02 in a one-tailed test). Participants who are left to their own devices

58
express lower confidence and competence than individuals who were nudged in the prompt to

choose a particular health care policy.

My final expectation concerns the relationship between all three treatment conditions. I

predicted that participants in the no choice condition would feel significantly more confident and

competent than individuals in the forced choice condition but would feel significantly less

confident and competent than individuals in the nudged choice condition. The first t-test

compared the feelings scale means between the forced choice group and the no choice group and

confirms my expectation (a difference of 1.23, p = 0.0005 in a one-tailed test). Participants in the

forced choice condition reported significantly lower values on the feelings scale than participants

in the no choice condition. A second t-test compared the feelings scale means between the no

choice condition and the nudged choice condition and demonstrated that the relationship is

insignificant (with a difference of .39, p = 0.33 in a one tailed test). Below is a visual

summarization of the effect of the treatments on my main dependent variable (feelings scale).

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 Figure 4.1. Treatment Effects on Feelings Scale (N=357)
4.5 Discussion
The literature on choice overload suggests that when individuals are presented with an

increasing number of choices, they will experience negative feelings such as regret and

dissatisfaction. Scholars in favor of choice intervention postulate that providing guidance and

limiting (or eliminating) choices in complex situations will result in a sense of relief and increase

individual autonomy. The research presented here attempts to address gaps left by both

literatures. First, the experiment tests whether choice limitations can have a positive, instead of

negative impact on individual feelings. Second, the dependent variable attempts to capture the

affective feelings nudge theorists suggest are impacted by choice architecture. A comprehensive

comparison of the differences between the treatment and control groups confirms most of my

expectations regarding the relationship between choice architecture and subsequent feelings of

confidence and competence. Compared to individuals who were given no guidance, those who

received a nudge or no choice at all reported higher scores on the feelings scale, meaning they

felt more confidence and competent, both regarding the task at hand and future health and

financial decisions.

Contrary to my expectations, however, there was no significant difference between the

two treatment conditions. Nudging and coercing individuals produced the same effect of

increasing relative expressions of confidence and competence. This result implies that even

retaining a semblance of choice (as in the nudge condition) produces no meaningful difference

than if a participant were given no choice at all. This finding leads to a natural question: why

preserve choice at all? The pro-nudge support for preserving choice remains on shaky ground if

increasing one’s sense of personal autonomy can be accomplished by removing choice altogether

(at least in these kinds of policy settings). In response, the nudge defender might resort back to

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the welfare argument. Relative to coercion, nudges at least give the chooser the option to deviate

when the alternative selection might improve their welfare. This finding also highlights the

power of the choice architect. The best results can be expected when individuals can be nudged

toward a choice that actually improves their welfare.

Another question arises from these results: could participants be experiencing a false

sense of confidence and competence? If so, wouldn’t their feelings of autonomy also be false?

Confidence and competence typically result from an individual successfully completing a task.

But in this scenario, participants in the two treatment groups did not really engage in the

decision-making process at all (participants rarely deviated from the nudge). It is possible that

the randomized health insurance plan suggested to them was terrible. If that were the case, then

they should feel less confident about the plan, not more confident. There are two possible

explanations for why those with less choice could feel more confident and competent. First, with

less choices, participants could feel less choice regret (having forgone other options). This seems

consistent with the choice overload literature, which claims that participant feelings of regret will

increase as the number of choices increase. Second, participants were told that a third-party firm

selected the plan for them. Nudges can be perceived as expert advice, especially in cases where

the chooser is uncertain and lacks the necessary expertise (McKenzie et al. 2006). An implicit

trust in the opinion of neutral experts could be contributing to the increase in confidence in the

two treatment groups. In future research, it would be interesting to see if eliminating the

reference to a neutral third-party effects participant confidence.

As opposed to freedom of choice and welfare, autonomy is a relatively difficult concept

to capture. This experiment began partly as an attempt to empirically capture the opaque notion

of “autonomy.” While the measurement might be imperfect, I consider a step in the right

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direction. Using individual reactions to a complex scenario, I attempted to measure at least one

component of autonomy, a confidence and belief in one’s capacity to make choices. While the

research presented here is not definitive, it is a step towards understanding the relationship

between choice architecture and autonomy and connecting the dots between choice, autonomy,

and welfare. On one hand, eliminating choice does harm autonomy. However, simply providing

more choice is a not sufficient condition for increasing autonomy either, as evidenced by the

choice overload literature. On the other hand, the limitation of choice could increase autonomy,

essentially by improving outcomes and making people feel better about their choices.

Further research is needed to understand more clearly the relationship between choice

architecture and autonomy. For instance, it is unclear whether the effects of the treatment persist

beyond the experiment and if these effects are short or long-term. Additionally, it is unclear how

feelings about one area of decision-making might influence an individual’s feeling and

performance in another scenario. For example, it would be interesting to replicate the scenario in

this experiment and then place the participants in another decision-making context with similar

features (complex, rare, consequential). Would the positive effects of choice architecture in the

first scenario carry over into the second? There may also be more robust ways to measure the

dependent variable. This experiment measures affective responses to the decision at hand, but a

more global measure of self-worth and self-efficacy might provide stronger leverage. Instead of

asking respondents to think about the decision they just made, another measure might ask more

general questions, for example: “How confident do you feel when making important decisions

that affect your life?”

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Chapter 5: Experiment 2 – Effect of Choice Overload and Scarcity on Cognition and
Confidence
The last experiment tested the effects of choice architecture on feelings of confidence and

competence and revealed that the more restricted the choice, the better individuals felt about

their ability to choose. As predicted, restricting choice positively effected participants view of

themselves and their choices. A favorable view of oneself is one of the necessary conditions for a

full expression of autonomy. This finding is encouraging for nudge supporters who are also

interested in the consequences of choice architecture on autonomy. Though the experiment

effectively demonstrated the results of isolating attention on one decision, reality often demands

our attention be torn in several directions at once. Individuals do not typically arrive at choices

unencumbered but bring with them certain cognitive and material “priors” not captured by the

previous experiment. One significant prior many individuals carry with them is financial

scarcity. In the following experiment, I hypothesize that inducing financial scarcity before a

complex financial decision will worsen the effect of bad choice architecture on autonomy.

5.1 Introduction
For the past half century, researchers in psychology, economics, political science, and

neuroscience have studied the various fallacies in human reason and behavior. Contrary to the

traditional portrait of man as homo economicus, humans experience all sorts cognitive biases that

lead to predictable, “irrational” results (Ariely 2008). Our decision-making is motivated more by

affect, framing, identity, and context, than pure calculation (Lodge and Taber 2013, Tversky and

Kahneman 1981). These insights are becoming increasingly influential in public policy, thanks to

efforts by Sunstein and Thaler (2008). They argue that the way choices are structured directly

effects outcomes, sometimes to the detriment of the chooser. The solution is for policymakers to

become more aware of choice context and actively structure choices in a way that promotes the

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welfare of those effected by the policy. These efforts are vital in a time when complex choices

are abundant and the consequences of making the wrong choice loom large.

Traditional economics also assumes that more choice is better. Individuals are more

likely to satisfy their preferences and maximize their wellbeing. However, a new literature called

“choice overload,” challenges this assumption. In certain cases, too much choice is associated

with dissatisfaction, disengagement, lower confidence, and regret (Schwartz 2004). While this

research advances our understanding of how choice context can affect outcomes, the theory

behind why this is the case is unclear. The choice “overload” literature posits that individuals

facing lots of options are overwhelmed by the information they are being asked to process and

are more inclined to think they did not make the optimal choice. But what does “overload” look

like? Additionally, the choice overload literature studies choice in isolation of environmental

factors. Individuals do not make decisions in a vacuum but bring with them prior experiences.

In this experiment, the prior experience I am interested in is financial scarcity. I turn to

the literature on the cognitive effects of scarcity to understand how contextual factors could

ameliorate or exacerbate the effects of choice overload. Studies consistently show that inducing

scarcity of various types significantly reduces cognitive ability (Mullainathan and Shafir 2013). I

am interested in financial scarcity and the compounding effects of financial scarcity on choice

overload. Research has yet to address this question and study how choice overload and scarcity

interact. To understand the compounding effects of scarcity on choice overload, I conduct an

experiment that first induces scarcity and then choice overload and measure the effects on

cognition and subjective evaluation. My goal in this study is two-fold. First, I hope to understand

each of the phenomena and its effects in isolation, using dependent variables from both

literatures. That is, how scarcity impacts subjective evaluations and cognition and how choice

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overload impacts cognition and subjective evaluations. Second, the experiment should show us

how scarcity and choice overload interact. My main hypothesis is that scarcity will exacerbate

the effects of choice overload.

Results from this experiment could provide insight into how individuals make decisions

in the real world. People face scarcity all the time, sometimes constantly (in the case of poverty),

and are then asked to engage in complex and consequential choices (i.e. personal health and

finance). If scarcity already reduces cognitive capacity, then choice overload could make things

worse, leading to the kind of poor decision-making that perpetuates scarcity. Implications for

policy will be discussed in the conclusion.

5.2 Scarcity
Scarcity is a concept we most readily identify with economics. Scarcity is a condition in

which there is not enough of a good for everyone who desires that good. The state of scarcity

explains fundamental phenomenon in economics, like overconsumption, opportunity cost,

pricing, etc. However, the psychological effects of scarcity are less well known. One of the

earliest suppositions of the psychological effects of scarcity is Hobbes, who argues that resource

scarcity in the state of nature leads to aggression and fear, and ultimately violence. In the context

I am discussing, scarcity is not a physical and objective state, but a cognitive and subjective one.

Scarcity means “having less than you feel you need” (Mullainathan and Shafir 2013, 4).

Researchers (mainly, psychologists) have discovered that inducing a feeling or perception of

scarcity negatively impacts our foresight, cognitive abilities, and self-control.

The negative effects of scarcity occur because scarcity captures our attention and does

not let go. If I constantly feel as if I do not have enough time or money, this state of anxiety or

awareness of my scarcity takes up mental resources that I would be using elsewhere. While this

65
feeling of scarcity might lead me to focus on relieving my scarcity, it also leads to “tunneling,”

causing me to neglect other important factors (Mullainathan and Shafir 2013, 36). Scarcity

effectively blocks out all other considerations until we have dealt with the scarcity. Additionally,

the awareness of scarcity sticks with us and imposes a “bandwidth tax.” “Bandwidth” refers to

computational capacity, or the ability to pay attention, think abstractly, make good decisions, and

resist temptation (Mullainathan and Shafir 2013, 41). Tunneling and the bandwidth tax work in

conjunction to diminish our decision-making abilities. When we are only focused on the present

scarcity, we lose the ability to consider the consequences of our decisions in an abstract and

thorough manner. In other words, scarcity increases the likelihood that we make decisions

unconsciously and automatically in situations when it really matters that we think clearly.

The main way researchers measure cognitive ability when inducing scarcity in

experimental settings is through some version of an IQ test, measuring logical reasoning, spatial

aptitude, and/or mathematical ability (Baumeister 2002). Other participants in scarcity

experiments have been asked to perform certain memory or attention related tasks, like clicking

on the screen where an object appears or remembering a sequence of shapes/words (Anuj et al.

2012, Radel and Clement-guillotin 2012, Jones and Rogers 2003). Although the focus of this

study will be on financial scarcity, researchers have studied the effects of scarcity using time,

food, and even relationships. Several studies have shown that inducing hunger or even being on a

diet is associated with lower cognitive ability (Radel and Clement-guillotin 2012, Piech et al.

2010, Jones and Rogers 2003). The effects have less to do with actual calorie intake and more

about how our minds are captured by scarcity. Other studies have demonstrated that inducing a

feeling of loneliness or social exclusion (i.e. a scarcity of human connection) also decreases

cognitive performance (Baumeister et al. 2005, Baumeister et al. 2002).

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 Studies measuring the effects of financial scarcity on cognition are no different. Inducing

financial scarcity, through resource allocation or priming individuals to think about their

finances, decreases participant’s cognitive abilities (Haushofer and Fehr 2014, Anuj et al. 2012).

In one study, researchers found that poor individuals performed significantly worse on cognitive

tests than rich individuals when they were prompted to think about their personal finances in a

hypothetical emergency (Mani et al. 2013). To demonstrate that the diminished cognitive

performance was not due to some exogenous explanation (i.e. the rich are just smarter),

researchers applied the same test to farmers pre- and post-harvest. They found that farmers in the

pre-harvest season (when they are relatively poorer) scored significantly lower on cognitive

testing than the same farmers in the post-harvest season (when they are relatively richer) (Mani

et al. 2013). The primary implication of this study is that poverty can largely be explained by

context, rather than inherent traits. Poverty is a kind of “perpetual scarcity,” one that imposes

constant cognitive load. This perpetual feeling of scarcity can have devastating and long-term

effects and leads to what Mullainathan and Shafir (2013) call the “scarcity trap.” In essence,

scarcity negatively effects our cognitive ability and foresight, causing us to be more risk-averse

and make decisions that perpetuate the initial scarcity. Being in the scarcity traps feels like you

are “constantly one step behind, constantly paying off last month’s expenses,” unable to think

beyond surviving the next day, week, or month (Mullainathan and Shafir 2013, 126).

Unfortunately, this is a condition millions of Americans find themselves in every day.

5.3 Choice Overload

The traditional Western and free-market narrative convinces consumers that choice is an

instrumental and intrinsic good. Anyone who walks into a local supermarket will see a

demonstration of the proliferation of choice. Our obsession with choice shapes the way we

interact with each other, our world, and ourselves. Our actions and choices differentiate us and

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come to signify our values, identity, and self-worth. Traditional economics tells us that when

people are given a greater number of choices, it is more likely their preferences will be satisfied,

in turn boosting their overall well-being. In other words, the more choice individuals have, the

greater freedom they experience, and the better off they are. But this approach assumes

individuals are capable of processing additional choices in light of their known preferences. A

growing body of literature in behavioral science challenges this traditional narrative and argues

that the proliferation of choice is actually making us miserable, depressed, and dissatisfied

(Schwartz 2004).

Choice overload is the phenomenon of experiencing too many choices, with subsequent

negative effects, like choice paralysis, anxiety, dissatisfaction, regret, and disengagement. There

are several reasons why these negative effects occur in situations where individuals face a

growing number of choices. First, adding more options increases the amount of information

individuals are being asked to process and then match to their preferences, causing a cognitive

processing overload (Peter et al. 2010). Second, with a greater number of choices comes a

greater perception or fear of “error” in choosing optimally. As the choice set grows, it becomes

less plausible to blame the presentation of options, and more likely that disappointing results are

the fault of the chooser, increasing the incidence of self-blame (Schwartz 2009). Finally, the

“attractiveness of the second-best, nonchosen alterative” is greater in larger choice sets, leading

to regret and dissatisfaction with what was chosen (Peter et al. 2010, 411). If I faced a choice

between chocolate and vanilla ice cream, my choice would probably be clear (even if I disliked

the fact that there were only 2 choices). But, if given the choice between 50 flavors of ice cream,

there may be 5 that I rank as equally likely to make me happy, bringing to the forefront of my

mind all of my “missed opportunities” for satisfaction. When taken together, the potential for

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dissatisfaction, cognitive overload, regret, and self-blame may cause individuals to forego

making the choice altogether. In sharp contrast to the traditional narrative that greater choice

enhances freedom, “it is arguable that the choice-induced paralysis that is observed is a sign of

diminished freedom” (Markus and Schwartz 2010, 352).

The effects of choice overload have been measured in various way and diverse contexts.

The study of the “too-much choice” effect began in consumer and marketing research, but has

since expanded to education, economics, and public policy. One way to measure the experience

of choice overload is through asking individuals to subjectively evaluate their choice. When

faced with too many options, individuals are generally more likely to experience dissatisfaction

with their decision, regret their choice, and report feeling anxious or unhappy (Schwartz 2009).

While undergraduate students in one study reported higher satisfaction and desirability with

choices presented in classes pre-enrollment, greater number of choices led to increased stress and

negative emotions when students were enrolled in the class (Ackerman, Gross, and Sawhney

Celly 2014).

A repeated finding from the literature in consumer research is that while people are

initially attracted to more choice, they experience higher regret and dissatisfaction after making

the choice (Botti and Hsee 2010, Iyengar and Lepper 2000). The other way researchers have

chosen to study the effects of choice overload is through observable behaviors and objective

outcomes. Faced with too many options, individuals will choose poorly, avoid making a choice,

defer their decision, or choose a default option (Iyengar and Lepper 2000). In one study on

401(k) participation among 800,000 employees, researchers found that as the number of fund

options increased, participation rates decreased (Iyengar, Jiang, and Huberman 2004). Another

study asked participants to answer 4 factual questions about a set of Medicare prescription drug

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plans and found that as the number of plans included in the choice set increased, the likelihood of

answering “correctly” decreased and the choice quality decreased (Hanoch et al. 2009).

Though the evidence of choice overload is significant, the effect is not ubiquitous. There

are several aspects of the choice environment and chooser characteristics that moderate the

effects of choice overload. One such moderating effect is chooser information. The more

informed individuals are about their preferences, or the more relevant expertise they can access,

the lower the possibility that choice overload will occur (Peter et al. 2010). If clear preferences

and relevant information is known, then the confidence of the chooser is also likely to rise,

mitigating the effect of choice overload (Reed, Mikels, and Lockenhoff 2012). Another way

decisions can become complex is the number of factors involved in making a choice. It is easier

to make a decision when the options differ along one dimension (e.g. color) than multiple

dimensions (e.g. color, texture, taste) (Chernev et al. 2014, 5). Likewise, the intent or goal of the

chooser adds to or diminishes the effects of choice overload (Chernev et al. 2014). An intent to

browse the options is going to place less pressure on the chooser than trying to be as accurate as

possible when making their selection. Finally, time (or awareness of time) can moderate the

effects of choice overload. Sometimes, especially in experimental settings, individuals perceive

they have less time when presented with larger choice sets because they have less ability to

thoroughly consider each option. However, when participants in a study were made aware of the

time available to make a choice and reassured that a rushed decision is a good one, the effects of

choice overload were significantly diminished (Inbar, Botti, and Hanko 2011).

Thus, an abundance of choice by itself does not induce choice overload but is also

determined by other contextual factors, like the complexity of the decision, knowledge of

preferences, and the intent of the chooser. Choice overload is more likely to occur in

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circumstances when the decision is complex (i.e. lots of factors to consider), the chooser is not

aware of their preferences, and the goal of the chooser is to be as accurate as possible.

5.4 Compounding Effects

The goal of this experiment is to understand the compounding effects of scarcity on

choice overload. Previous research has studied the effects of choice overload and scarcity as

separate phenomenon and this is the first attempt to study them together. A table summarizing

the four treatment groups is below.

Independent variable(s): Scarcity (induced by scenarios) and Choice Overload (induced

by decision about car insurance)

Participants will first face several scenarios meant to trigger awareness of their own

personal finances. The scenarios used here have been adopted from a landmark study of scarcity,

which examined the effect of financial scarcity on cognitive ability (Mani et al. 2013). Three

scenarios will be presented to the participants and for each one the participant will need to think

about how they would respond, requiring to them to think about the state of their current

finances. The control group will be asked to respond to situations in which there is little financial

burden. The treatment group will be asked to respond to situations in which there is a large

financial burden. After reading the three scenarios, participants will be asked to choose a car

insurance plan from a list of three choices (control group) or eight choices (treatment group). Not

only are the effects of choice overload more likely when individuals are faced with a complex

choice with lots of factors to consider, but the task also mirrors policy contexts where individuals

are asked to make a difficult choice, among lots of options, with very little information. With

three options, individuals are less likely to be overwhelmed by the amount of information

relative to the participants presented with eight options.

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 Dependent variables: Cognitive ability (Raven’s progressive matrices) and a confidence

score (how the respondent feels about their choice and their ability to make a decision)

Raven’s progressive matrices are “the most common way that psychologists, educators,

the military, and others measure what is called fluid intelligence, the capacity to think logically,

analyze and solve novel problems, independent of background knowledge” (Mullainathan and

Shafir 2013, 48). Raven’s progressive matrices presents participants with a matrix or string of

objects and asks them to choose the object that completes the matrix or comes next in the string.

The Raven’s progressive matrices test is so popular because it is a relatively neutral way to

measure cognitive ability. The test transcends language and culture and does not require any

special knowledge (e.g. mathematics or writing). Participants will be given one example of the

progressive matrix and then asked to complete eight puzzles. To measure the effects of choice

overload, participants will be prompted to assess their confidence, satisfaction, and competence

related to their choice of car insurance. These questions are adapted from the numerous

dependent variables used to measure choice overload.

Treatment groups Control (no scarcity) Treatment (scarcity)

Control (no choice overload – S0O0 S1O0
3 choices)
Treatment (choice overload – S0O1 S1O1
8 choices)

Hypothesis 1: Participants in S1O1 will score significantly lower on cognitive capacity

and feel significantly less confident, competent, and satisfied than participants in any of

the other experimental conditions.

My central hypothesis is that taken together, the feeling of scarcity will compound on

choice overload, diminishing cognitive ability, increasing dissatisfaction, and decreasing

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confidence. The theory behind scarcity is that it brings whatever scarcity we face to the forefront

of our minds. If we are consumed with thoughts about our scarcity, we exhibit “tunneling” and

lower cognitive performance. If participants are first triggered to think about their own scarcity,

they will be less likely to be at their “best” when they are faced with a complex decision that

requires their full attention and understanding. As the name “choice overload” implies, we are

likely to feel cognitively “overloaded” by the amount of information we are expected to process.

Added together, the cognitive load imposed by scarcity and choice overload will diminish

cognitive ability more than either of the conditions on their own.

Additionally, participants are already likely to feel worse about their choice and

themselves when experiencing choice overload. The added preoccupation with scarcity means

they might be distracted and not able to give their full attention to the task at hand. Anyone who

has been busy with something else and made a hasty decision knows they might have felt better

about the decision if they could have devoted more attention and energy. Thus, the cognitive tax

imposed by scarcity and choice overload is more likely to produce feelings of dissatisfaction and

incompetence.

Hypothesis 2: Participants in S1O0 will score significantly lower on cognitive capacity

and feel significantly less confident, competent, and satisfied than participants in S0O0.

As stated above, part of the experiment is meant to study the isolated effects of scarcity

and choice overload on cognitive ability and subjective responses. I predict that inducing scarcity

will negatively impact cognitive capacity and personal evaluations. The negative effect of

scarcity on cognitive capacity is well documented in the literature and I hope to replicate it in

this experiment. Scarcity captures the mind, meaning that respondents will have less cognitive

“bandwidth” to respond accurately to the abstract matrices test. More specifically, students who

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are induced to think about their financial situation (and future hypothetical situations), will be

too preoccupied to thoughtfully consider their answers to the matrices test. Furthermore, I predict

that the tunneling effect of scarcity will make it difficult for participants to clearly consider all

the factors that go into selecting a car insurance plan. If the respondent’s attention is elsewhere,

they will devote less energy to selecting a plan that would optimize their preferences. In turn,

respondents who experience the scarcity condition are less likely to feel good about their

decision than participants in the control group.

Hypothesis 3: Participants in S0O1 will score significantly lower on cognitive capacity

and feel significantly less confident, competent, and satisfied than participants in S0O0.

Finally, I predict that participants in the choice overload condition will demonstrate lower

cognitive capacity, as measured by the Raven’s test, and feel worse about their choice and

themselves, as measured by the confidence score, than participants in the control group. First, I

predict that the effect of choice overload on subjective evaluations will match expectations from

the literature. Participants facing eight car insurance plans, versus three, are more likely to

experience doubt, dissatisfaction, and insecurity. As the information they are asked to process

increases, they are more likely to notice foregone choices and experience lower confidence in

their decision-making abilities. Second, the choice overload literature has yet to explore the

consequences of choice overload on cognition. One of the theories behind the choice overload

effect is that individuals cannot process the amount of information given to them. Similar to the

impact of scarcity, it is possible that choice overload also imposes a bandwidth tax, impeding

cognition. If this is the case, then increasing the number of choices given to participants should

lower their score on the Raven’s test.

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5.5 Experimental Data and Methods
In order to test my hypotheses, I designed a survey experiment in which participants were

prompted to consider their personal finances and make a complex decision about car insurance,

before answering a series of questions. To ensure the integrity and transparency of my study, I

pre-registered my hypotheses online (aspredicted.org). The experiment took place in the Winter

quarter of 2020 in the political science experimental laboratory at the University of California,

Davis. A total of 275 political science undergraduate students participated. A table showing the

distribution of students across the experimental groups is below. Students who participated

received extra credit in their classes and the experiment took an average of 14 minutes to

complete. Of the 275 subjects, 64% identified as female (N=177), 35% identified as

Hispanic/Latino (N=96), and 31% identified as middle class (N=84).5 When asked about their

experience with car insurance, 57% responded that they did own, rent, or lease a car (N=158),

60% did not have experience buying car insurance (N=165) and 68% had done very little to no

research on car insurance (N=186).

Treatment groups Control (no scarcity) Treatment (scarcity)

Control (no choice overload – 63 74
3 choices)
Treatment (choice overload – 71 67
8 choices)

After consenting to participate, students were each presented with the same three

hypothetical scenarios meant to prompt thoughts about their personal finances. The questions

were about a potential tuition hike, an emergency medical bill and a surprise apartment issue

5
Analysis of variance (ANOVA) tests were conducted for each demographic variable and the
results were insignificant, indicating that there is not a statistical difference between the
demographic means for each treatment condition.
75
(broken refrigerator), all realistic situations students face regularly. The responses were open-

ended in order to encourage students to visualize how they would react to each situation,

including how each situation would impact their personal finances. In comparison to multiple

choice questions, open-ended responses force the students to engage with the scenario. The

student’s individual responses in this portion were not used. Instead, the act of writing a response

was intended to trigger feelings of scarcity. For the control condition, the financial burden of the

three scenarios was low. In the treatment condition, students responded to the same three

scenarios, but the financial burden was much greater. For example, students in the control

condition were told that tuition for the next year would increase by 1% (or $125). Students in the

treatment condition were told that tuition for the next academic year would increase by 5% (or

$725). The amounts are meant to be substantially different, but not unrealistic. The second

hypothetical scenario asked students to consider multiple car insurance plans and pick one. They

were provided with definitions of all insurance terms. Again, the scenario reflected a

complicated choice many students have made (or will make) in their life. The control condition

presented students with three options, while the treatment condition presented students with eight

options. A copy of the survey can be found in Appendix B.

The first dependent variable, Raven’s Matrices test, included 8 matrix questions. The

mean matrix “score” is 4 and the standard deviation is 1.89, indicating that the average number

of correctly answered questions is 4 (or 50%). The second dependent variable is a composite

score, including 5 questions regarding individual feelings of confidence, capability, satisfaction,

and regret (see Questions 3-7 in Appendix B). The range of the “confidence score” is 8-25, the

mean is 17.7 and the standard deviation is 4. Higher values indicate a higher level of confidence.

In order to test whether the inclusion of the questions used in the confidence score are

76
appropriate and covariate, I checked the Cronbach Alpha score, which is .81. The high value of

the Cronbach Alpha score leads me to conclude that the questions included in the dependent

variable, confidence score, are closely related and can be safely combined.

5.6 Results
To test my hypotheses, I conducted Welch’s t-tests to determine if the difference between

means for two groups was statistically significant. The first hypothesis states my expectation that

when participants experience both scarcity and choice overload, they will exhibit lower matrix

scores and lower confidence scores than any of the other experimental conditions. Students in the

scarcity and choice overload treatment scored only slightly lower on the matrix test than students

in the other experimental conditions (with a difference of 0.05) and the difference was not

statistically significant (t = 0.2, p = 0.41 in a one-tailed test). In line with my expectations,

students in the scarcity and choice overload treatment reported a lower confidence score than

students in the other experimental conditions (with a difference of 1.6) and the difference was

statistically significant (t = 2.9, p = 0.001 in a one-tailed test). My hypothesis failed to predict the

results of the first t-test and participants in the compounded treatment condition did not perform

statistically worse on the Raven’s matrices test than participants in the other experimental

conditions. The second t-test confirmed my hypothesis that students who experienced scarcity

and choice overload would have less confidence in their choice and ability compared to students

in the other experimental conditions. The means for the confidence score for each experimental

condition are presented below.

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 Figure 5.1. Treatment Effects on Confidence Score (N=275)
The second hypothesis states my expectation that when students experience the scarcity

condition (and no choice overload), they will demonstrate lower matrix scores and lower

confidence scores than participants in the control condition. Contrary to my expectation, students

who were given the scarcity condition scored higher on the matrix test than students in the

control condition (with a difference of 0.5) and the difference is statistically significant (t = -1.8,

p = 0.03 in a one-tailed test). When comparing confidence scores, the students who received the

scarcity condition only scored slightly lower than students in the control condition (with a

difference of 0.72) and the difference is not statistically significant (t = 0.97, p = 0.17 in a one-

tailed test). My hypothesis failed to predict the results of both t-tests. Students who experienced

scarcity did not express significantly lower levels of confidence in their choice and ability. And

contrary to the literature on scarcity, participants who experienced scarcity scored higher on the

matrix test. The means for the matrix score for each experimental condition are presented below.

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 Figure 5.2. Treatment Effects on Matrix Score (N=275)
The third hypothesis predicted that students who experienced choice overload (and no

scarcity) would report lower matrix scores and lower confidence scores compared to participants

in the control condition. Similar to results for the last hypothesis, students who were given the

choice overload condition scored higher on the matrix test than students in the control condition

(with a difference of 0.8) and the difference is strongly significant (t = -2.6, p = 0.005 in a one-

tailed test). Comparing confidence scores between the choice overload treatment group and the

control group, students did report lower confidence scores (with a difference of 1.1), but the

difference is just shy of statistical significance (t = 1.6, p = 0.06 in a one-tailed test). My

hypothesis failed to predict the result of both t-tests. Although the results of the t-test for

confidence scores were in the correct direction and follow expectations from the literature, the

difference between the scores is statistically insignificant. Further, students who were selected to

receive the choice overload condition performed significantly better on the matrix test than

students in the control condition.

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 The difference in reported confidence scores is insignificant for both hypothesis 2 and 3,

but strongly significant for hypothesis 1. To isolate the difference even further, I conducted a t-

test comparing the confidence scores for the compounded treatment condition and the control

condition and found the difference of 2.3 to be statistically significant (t = 3.2, p = 0.0009 in a

one-tailed test). The strong statistical difference in the means for these two conditions might be

overwhelming the difference between the compounded treatment condition and all other

treatments tested in my first hypothesis. In other words, the combined experience of scarcity and

choice overload negatively impacted participant confidence more than the experience of scarcity

or choice overload on its own.

When comparing the difference in confidence score means between the compounded

treatment condition and the two other treatment conditions (scarcity and choice overload), I also

found the difference for each to be statistically significant. Students in the compounded treatment

reported lower confidence scores (with a difference of 1.5) than students who just received the

scarcity condition (t = 2.2, p = 0.01 in a one-tailed test). Similarly, participants in the

compounded treatment condition reported lower confidence scores (with a difference of 1.1) than

participants who just received the choice overload condition (t = 1.6, p = 0.05 in a one-tailed

test). As shown in Figure 1 above, the confidence score continued to decrease for each treatment

condition and sharply declines when comparing the control condition to the interaction

condition.

5.7 Discussion
Previous studies show that inducing financial scarcity negatively impacts cognition.

However, the results from this experiment reveal the opposite story. Students who faced the

financial scarcity condition scored higher on the matrix text, compared to students who did not.

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Furthermore, this result was true independent of the student’s self-reported class. After isolating

the students who identified as “lower” and “lower-middle” class, the results become stronger.

Students in these groups who experienced financial scarcity scored higher on the matrix test

(with a difference of .93) than the same students who received the control condition (t = -3, p =

0.002 in a one-tailed test). In other words, students who received the scarcity condition answered

almost one more matrix question correctly on average compared to students in the treatment

condition. Contrary to expectations from the literature, financial scarcity actually improved

cognitive performance.

Experiencing scarcity is supposed to cause tunneling and impose a bandwidth tax, both of

which harm cognitive ability and abstract thinking. However, it is possible that the stress and

threat imposed by scarcity sharpens attention and improves mental acuity. Procrastinators are

familiar with the pressure of time scarcity and some perform quite well. Students must juggle

multiple time commitments and are often forced into situations of time scarcity (tests, deadlines

for assignments, etc.), and therefore might be better equipped to think under pressure.

Additionally, students might be less effected by financial scarcity because they are (probably)

not the breadwinners of their family. An individual would probably experience greater stress and

anxiety when forced to think about their lack of finances if they are responsible for housing and

feeding a whole family and cannot rely on other family members for financial support.

If I were to replicate this study, I would include another metric for cognitive ability, such

as a memory task, and see if the results are the same. Memory tests have similar benefits to the

matrix test, namely that they do not require mathematical or language skills. While memory tests

do not require the same level of abstract thinking, they do require greater sustained attention. In

contrast to the matrix test, where students are given an unlimited amount of time and asked to

81
solve a puzzle, memory tests require individuals to retain a certain amount of information to be

used at a later time. If students performed better on a memory test when they received the

scarcity treatment, this would strengthen the evidence for the findings in this paper and present a

challenge to the scarcity literature. If the results using a memory test were insignificant, or

contrary to the findings in this study, it might indicate a difference in the parts of the brain that

are activated in response to scarcity.

While the results of experiments measuring the effect of choice overload on confidence,

competence, and satisfaction are mixed, the evidence clearly supports the theory when the

decision is complex and rare. The decision scenario I chose for this experiment meets both of

those criteria, yet there is no statistically significant difference between participants who

received the choice overload treatment and those that did not. Although the negative effect aligns

with expectations in the literature, the difference between the treatment and control conditions

was not large enough, throwing the choice overload hypothesis into question.

A few things might explain this result. First, it is possible the students did not care

enough about the decision they were making to have any feelings about it at all. Therefore, it

would not matter if the participants received three or eight choices. Second, the ordering of the

dependent variables might explain the small difference in confidence scores. By placing the

matrix test before the confidence battery, students might have forgotten what car insurance plan

they chose. It is also possible that students felt confident about their performance on the matrix

test and that extra confidence effected their answers to the confidence score questions. This

theory would be supported by the fact that participants who experienced choice overload scored

significantly higher on the matrix test than participants in the control group. If I were to conduct

this experiment again, I would randomize the presentation of the dependent variables and also

82
include a question asking students to evaluate how they believe they performed on the matrix

test.

The original intent of this experiment was to test the compounding effects of scarcity and

choice overload on cognitive capacity and levels of confidence, competence, and satisfaction. By

introducing scarcity to an already complex, rare decision, I could more closely mimic real-world

decision-making. If context matters, as the literature on choice architecture suggests, then one of

the most influential contextual factors would be individual financial resources. If I perceive my

financial resources to be scarce, that might exacerbate poor decision-making and negatively

affect my confidence. The results show that the combination of scarcity and choice overload has

no effect on cognitive capacity, as measured by the matrix test score. It is unclear why the

interaction treatment condition was insignificant while the two other treatment conditions were

strongly significant. Again, I would be interested in repeating this study with a different

dependent variable for cognitive capacity to further understand this relationship.

The students who experienced scarcity and choice overload reported much lower

confidence scores than the participants in all other treatment conditions, following my

expectation. Scarcity, combined with choice overload, caused students to self-report significantly

lower levels of competence, satisfaction, and confidence. This finding is novel for both the

scarcity and the choice overload literatures and presents an opportunity for further research. This

result is significant for both the scarcity literature and choice overload literature. What is shows

is that scarcity might not only impact cognitive ability, but also self-perceptions, decreasing

confidence and satisfaction. More research is needed to study the wider ranging effects of

scarcity on human cognition and self-confidence. The finding also provides evidence that choice

overload negatively impacts confidence and satisfaction when combined with financial scarcity.

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More research is needed to understand the interaction between and choice overload and other

cognitive barriers to good decision-making. And to understand why confidence is unaffected by

the introduction of choice overload or scarcity but is significantly affected when the two

conditions are combined.

Individuals do not approach all decisions with the same resources or the same lived

experiences. Context matters. Some people arrive at decisions with circumstances that impact

cognition, like financial scarcity. Faced with decisions that are complex, rare, resource

consuming, and overwhelming can cause people to make poorer choices and feel bad about those

choices. When structuring choices, policymakers need to consider not only the quantity of

options, but the quality as well. Poor choice architecture, in this case a larger choice set,

demonstrates that more choice is not necessarily better.

Finally, if believing in oneself and one’s decision-making capacity are conditions for

acting autonomously, then the compounding effects of scarcity and choice overload diminishes

autonomy. The main finding in this study provides further evidence for my larger theory. Choice

architecture can impact conditions for autonomy. In this case, bad choice architecture, in the

form of choice overload, paired with scarcity, negatively effects key conditions for autonomy.

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Conclusion
What is the relationship between choice architecture (or nudging) and autonomy?

Throughout the course of my dissertation I have explored theoretical and empirical answers to

that question. The relationship between choice and autonomy is complex. While some scholars

affirm that choice is essential to preserving autonomy, emerging behavioral science research

challenges this assumption. More choice can lead to paralysis, dissatisfaction, and regret,

especially in contexts where the decision is complex, rare, consequential, and resource intensive.

My own research reveals that restricting choice can improve feelings of confidence and

competence. When combined with financial scarcity, too much choice can also negatively impact

feelings of confidence and competence. The empirical evidence provided here does not

definitively prove a positive relationship between choice architecture and autonomy, but it does

provide compelling evidence that choice architecture impacts feelings that are tied to conditions

for acting autonomously. The key takeaway is that in some policy contexts, promoting autonomy

might require a restriction of choice.

Thaler and Sunstein initially pitched nudging as a true “third way” between free choice

supported by the right and no choice supported by the left. Nudges are meant to improve

outcomes and welfare by preserving some level of choice, but my research opens up the

possibility that nudges can also improve autonomy. Pro-nudge scholars have made this argument

before, but without seriously considering the meaning of autonomy and how exactly choice

architecture can enhance autonomy. For their part, scholars making theoretical arguments also

refused to engage the empirical success of nudging. A true “third way” could be achieved if

nudging were found to not only preserve choice but also increase autonomy. Another goal of my

dissertation was to cross the divide between the theoretical and the empirical, between

philosophy and behavioral science. I believe more attempts to do so in the literature will

85
strengthen both disciplines. To overcome the societal challenges before us, we must take a

multidisciplinary approach.

Policymakers in government and the private sector are already taking a multidisciplinary

approach by incorporating insights from behavioral science. Governments are establishing

“nudge” units and shaping policy through a behavioral lens. In the private sector, companies are

hiring behavioral scientists to improve productivity, reduce costs, and market products. The use

of evidence and science marks an improvement over purely anecdotal evidence and moralistic

arguments. Especially when it comes to addressing economic and racial inequality, behavioral

science can lend some objectivity to solutions and combat prejudicial reasoning. I am not

arguing that nudge theory is without fault. We should still collectively be on the lookout for

government overreach and manipulation. Preserving choice is still an important goal of nudging.

But the benefits of choice architecture outweigh the risks, especially considering alternatives like

unfettered choice (e.g. rollout of Medicare Part D plans) or outright bans.

The research presented here marks an initial step towards understanding the relationship

between choice architecture and autonomy, but many questions remain. If I were to continue

research in this area, I would be interested in several questions. First, I would alter my

independent variable to understand how context plays a role in altering confidence and

competence. The experiments I designed presented participants with a complex choice (health

insurance and car insurance). In a future study I would compare the effect of a complex choice

against a simpler choice (for example, picking a book to read or a car to buy). I predict that

nudging participants or presenting them with lots of options in the simpler scenario would have

no effect on confidence and competence and might even frustrate them. Comparing the effect of

a difficult and simple choice on feelings of confidence and competence would reveal if context

86
matters. If the choice context does matter, this would clarify when we should utilize choice

architecture to enhance conditions for autonomy.

Second, little is known about the cumulative effects of nudging. In the first experiment, I

implemented a nudge for one decision but how would my results change if I utilized nudges

across several decisions? Would the cumulative effect of nudging increase or decrease levels of

confidence? I would also be interested to see if participants deviated from the nudge more often

as the number of decisions increased. Answering these questions would reveal the limits of

choice architecture. Perhaps a little nudging is effective, but too much nudging might be

ineffective. Additionally, I would test the effect of changing the type of nudge used. I employed

a true nudge in my first experiment, but nudges can also come in the form of reminders and

increased information. Would the type of intervention change my results? Studying these

questions would give us a better roadmap for when and how choice architecture can be most

effective in increasing feelings of confidence and competence.

Finally, I made the argument at the end of chapter 3 that choice architecture can enhance

autonomy and mitigate inequality by changing the way we think and talk about poverty. Given

the opportunity, I would design an experiment testing the effect of different frames about the

causes of poverty on respondents’ perceptions of people in poverty. If my intuition is correct,

then framing the causes of poverty in terms of behavioral science might alter the way people

perceive poverty and assign blame. This alternative frame might also inspire more sympathetic

feeling towards those in poverty. And if we can all accept the universality of cognitive biases,

then we can begin to overcome prejudicial thinking and address societal inequalities.

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Appendix A. Survey Design, Experiment 1
Introduction
TITLE OF STUDY: Effect of choice architecture on individual subjective responses
INVESTIGATOR: Kendra Tully
PURPOSE
You are invited to participate in a research study. The purpose of the study is to understand your
responses to health insurance policy options. You must be at least 18 years of age to participate.
If you agree to participate in this research, you will be asked to complete a survey. You will be
asked questions about your response to a specific scenario.
The risks of this research are minimal. Some of the questions might make you feel
uncomfortable or upset. You do not have to answer any of the questions you do not want to
answer.
COST, BENEFITS, AND COMPENSATION
The survey will take about 10-15 minutes to complete. You will receive $.50 for your
participation and your payment will be completed through Amazon Mechanical Turk.
CONFIDENTIALITY
Confidentiality will be maintained at all times. Your name or other identifying information will
not be associated with any of the answers you provide on the survey. Your answers will remain
entirely anonymous.
We will also save the data collected for possible use in future research that will be done at UC
Davis or at other organizations outside of UC Davis. The data we save or share with other
organizations will not include any information that directly identifies you.
CONTACT
If you have any questions about the study, please contact Kendra Tully (katully@ucdavis.edu). If
you feel you have not been treated according to the descriptions written here or your rights as a
participant in research have not been honored during the course of this study you may contact the
IRB Administration, CTSC Building, University of California, 2991 Stockton Blvd Ste. 1400,
Room 1429, Sacramento, CA (phone: 916-703-9151).
RIGHTS
Participation in research is completely voluntary. You are free to decline to take part in the
project. You can decline to answer any questions and you can stop taking part in the project at
any time. Whether or not you choose to participate, or answer any question, or stop participating
in the project, there will be no penalty to you or loss of benefits to which you are otherwise
entitled.
If you agree to take part int his research, please click the “Accept” button below.

88
Instructions
On the next screen, you will be placed in an imaginary scenario where you will be asked to read
about different health insurance plans and then answer a series of questions after you have been
enrolled in a health insurance plan. Do your best to imagine yourself in this scenario as if the
decision you are facing were one that had an impact on your life. Do you understand the task you
are being asked to perform?
• Yes
• No
Vignettes
Imagine you just got a full-time job working for a company called Otto Productions. This is great
news for your family – you, your spouse and your young child. Before you begin work, Otto
Productions requires all their employees be enrolled in a health insurance plan and the payments
will be automatically deducted from your paycheck. Your annual salary will be $65,000. Otto
Productions offers 4 health insurance plan options, which are listed below along with some
definitions of the terms used. Read over the definitions and then consider all the plan options
before moving on. You will not be able to view the plan information again, so please take your
time with it now.
Definitions
Premium: The amount you pay for your health insurance every month.
Copay: A fixed amount you pay for a covered health care service after you’ve paid your
deductible.
Annual Deductible: The amount you pay for covered health care services before your insurance
plan starts to pay.
Health Insurance Plans (Participants randomly receive one of the following tables)
Health Plan Monthly Premium Doctor Visit Copay Annual Deductible
A $601 $21 $800
B $408 $24 $1400
C $578 $19 $900
D $393 $18 $1500

Health Plan Monthly Premium Doctor Visit Copay Annual Deductible

A $393 $18 $1500
B $601 $21 $800
C $408 $24 $1400
D $578 $19 $900

Health Plan Monthly Premium Doctor Visit Copay Annual Deductible

89
 A $578 $19 $900
B $393 $18 $1500
C $601 $21 $800
D $408 $24 $1400

Health Plan Monthly Premium Doctor Visit Copay Annual Deductible

A $408 $24 $1400
B $578 $19 $900
C $393 $18 $1500
D $601 $21 $800

Control
Please make your selection now. (Participants are asked to select Plan A, Plan B, Plan C, or
Plan D)
Treatment 1 (nudge) (Plan selection is randomized)
A third-party consumer watchdog group has assessed your situation and has concluded that
Health Insurance plan {X} will be the best fit for you and your family. Otto Productions will
automatically enroll you in that plan unless you choose otherwise. You can confirm the decision
of Otto Productions by selecting that option or opt-out of this suggestion by selecting another
plan. Please make your selection now. (Participants are asked to select Plan A, Plan B, Plan C,
or Plan D)
Treatment 2 (coercion) (Plan selection is randomized)
A third-party consumer watchdog group has assessed your situation and has concluded that
Health Insurance plan {X} will be the best fit for you and your family. The group has advised
Otto Productions and the company has enrolled you in that plan.
Post-treatment survey
INSTRUCTIONS: Read each of the following statements and decide how much you agree or
disagree with each according to your feelings and experience.
1. “I feel confident about the health insurance plan I am enrolled in.”
2. “I feel relieved that the task (choosing a health insurance plan) is complete.”
3. “I feel I was capable of processing the amount of information given to me.”
4. “I feel I was competent enough to understand the various health insurance plan options.”
5. “I feel I was competent enough to choose the best health insurance plan for my family
(even if I was not given that opportunity)?”
6. “I feel my interests are being promoted by the health insurance plan I am enrolled in.”
7. “After facing this situation, I feel confident making future important health and financial
decisions.”
8. “Given the opportunity, I would change the health insurance plan I am enrolled in.”

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Each participant was given the following options for all of these questions:
• Strongly Agree
• Agree
• Neither Agree or Disagree
• Disagree
• Strongly Disagree
Post-Survey Questions
What is the name of the company who is hiring you?
(Otto Productions)
How many health insurance plan options were presented to you? Participants selected from a
drop-down menu from 1-5
Are you currently enrolled in a health insurance plan through your employer?
• Yes
• No
• Don’t Know
Are you currently enrolled in a private health insurance plan?
• Yes
• No
• Don’t Know
Are you currently receiving medical benefits from the government (i.e. Medicare, Medicaid)?
• Yes
• No
• Don’t Know
How often have you thought about your health insurance plan in the last 6 months?
• Very Often
• Often
• Not Very Often
• Not at All
How much research have you done on health insurance options?
• Extensive research
• Some research
• Very little research
• No research at all

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How comfortable are you when it comes to making decision about your health insurance
coverage?
• Very comfortable
• Fairly comfortable
• Neither comfortable or uncomfortable
• Fairly uncomfortable
• Very uncomfortable
How competent do you feel when it comes to making decisions about your health insurance
coverage?
• Very competent
• Fairly competent
• Neither competent or incompetent
• Fairly incompetent
• Very incompetent
When considering health insurance plans, do you tend to prioritize cost or coverage?
• Prioritize cost
• Prioritize neither cost or coverage
• Prioritize coverage
What is your age?
(18-65)
Which of the following best describes your gender?
• Male
• Female
• Other
Which of the following best described your ethnicity?
• White
• Black/ African-American
• Hispanic/Latino
• Asian
• Middle Eastern
• Other
In which state do you currently live? Respondents were given a dropdown menu of all 50 states
Which of the following best describes your political ideology?
• Very Liberal

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 • Liberal
• Somewhat Liberal
• Neither Liberal or Conservative
• Somewhat Conservative
• Conservative
• Very Conservative
Which of the following best describes your level of education?
• Less than high school
• High school diploma/ GED
• Some college
• Associates Degree
• Bachelors Decree
• Master’s degree
• Doctorate Degree
Select the income bracket that best approximates your household income before taxes.
• Less than $25,000
• $25,000 to $34,999
• $35,000 to $49,999
• $50,000 to $74,999
• $75,000 to $99,999
• $100,000 or more

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Appendix B. Survey Design, Experiment 2
TITLE OF STUDY: Effects of Scarcity and Choice Overload
INVESTIGATOR: Kendra Tully
INTRODUCTION AND PURPOSE
You are being invited to join a research study. The purpose of the study is to see if two scenarios
directing you to think about your personal finances effects your cognitive and subjective
responses. If you agree to participate in this research, you will be asked to read through two
scenarios and respond to a series of survey questions. You will be asked questions about your
response to the scenarios as well as some demographic information (age, ethnicity, etc.). It will
take about 15 minutes to complete the scenarios and survey. The only cost of participation is
time. The only benefit of participation is extra credit in your class for participating regardless of
whether you complete the survey. We hope that the research will add to scientific knowledge
regarding the effects of scarcity and choice overload.
The risks of this research are minimal. Some of the questions might make you feel
uncomfortable or upset. You do not have to answer any of the questions you do not want to
answer.
CONFIDENTIALITY
As with all research, there is a chance that confidentiality could be compromised; however, we
are taking precautions to minimize this risk. Your responses to the survey will not include
information that identifies you. However, individuals from UC Davis who oversee research may
access your data during audits or other monitoring activities. To minimize the risks of breach of
confidentiality, we will store the data on a password protected device only accessible by the
Principle Investigator.
COMPENSATION
You will receive extra credit in your class for participating regardless of whether you complete
the survey. Please talk to your TA or your instructor to learn about the specifics of the extra
credit being offered in your class.
RIGHTS
Participation in research is completely voluntary. You are free to decline to take part in the
project. You can decline to answer any questions and you can stop taking part in the project at
any time. Whether or not you choose to participate, or answer any question, or stop participating
in the project, there will be no penalty to you or loss of benefits to which you are otherwise
entitled.
CONTACT
If you have any questions about this research, please feel free to contact the investigator at
katully@ucdavis.edu. If you have any questions about your rights or treatment as a research

94
participant in this study, please contact the University of California Davis, Institutional Review
Board at 916-703-9158 or HS-IRBEducation@ucdavis.edu.
If you agree to take part in this research, please click the “Accept” or “Do not accept” button
below. If you do not accept, please return to the lab office.
Instructions (question order is randomized; control values are in green, treatment values are in
red)
On the next screen, you will be presented with a set of three scenarios [randomized] and asked
how you would respond to each scenario. Take your time and read the scenario carefully. When
you are ready, select next to begin.
Suppose UC Davis Chancellor Gary S. May has just announced an increase in tuition and fees
for the next academic year. The estimated increase will be 1% [5%], or $145 [$725]. Given your
situation, what financial changes would you need to make? How would the tuition hike effect
your life? [Open ended response]
Suppose you recently had a medical emergency and the hospital bills you $200 [$2,000]. Are
there ways in which you may be able to come up with that amount of money on short notice?
How would you go about it? Would it cause you long-lasting financial hardship? [Open ended
response]
Suppose the refrigerator in your residence breaks down and you are responsible for buying a new
one. You go to the home improvement store and are given two options: 1) You can pay the full
amount in cash, which will cost you $399 [$999], or 2) You can pay off the refrigerator in 12
monthly payments, of $40 [$100] each, which would amount to a total of $480 [$1,200]. Which
option would you opt for? [1 or 2] Why did you select the option you did? [Open ended
response]
Instructions (control values are in green, treatment values are in red)
On the next screen, you will be presented with a set of car insurance plans. Any resemblance of
car insurance company names to actual car insurance providers is purely coincidental. Please
consider each plan carefully before making your decision. You will be presented with several
definitions of terms to help you with your selection. When you understand these instructions,
select next to begin.
Control
Please choose between the following three car insurance plans [randomized]. Definitions of
terms are provided below.
Liability Coverage: Helps pay for the cost of an accident you caused by covering costs related to
another person’s medical expenses (bodily injury liability) or another person’s property damage
(property damage liability).

95
Medical Payments Coverage: If you, your passengers or family members are involved in an
accident while driving your car, this coverage helps pay for certain medical expenses related to
the accident.
Uninsured Motorist Coverage: If you are hit by an uninsured driver, this type of coverage helps
pay for your medical expenses.
Comprehensive Deductible: This type of coverage helps pay for damage to your vehicle from
non-collision incidents like theft, vandalism, fire, natural phenomenon, etc. (minus your
deductible).
Collision Deductible: If you are involved in an accident, this type of coverage helps pay for
repairs to your vehicle or replace it (minus your deductible and actual cash value of the car).

 Good Car Coverage

 There-4-U Car Insurance
 Taylor & Sons Insurance
Treatment
Please choose between the following eight car insurance plans [randomized]. Definitions of
terms are provided below.
Liability Coverage: Helps pay for the cost of an accident you caused by covering costs related to
another person’s medical expenses (bodily injury liability) or another person’s property damage
(property damage liability).
Medical Payments Coverage: If you, your passengers or family members are involved in an
accident while driving your car, this coverage helps pay for certain medical expenses related to
the accident.
Uninsured Motorist Coverage: If you are hit by an uninsured driver, this type of coverage helps
pay for your medical expenses.

96
Comprehensive Deductible: This type of coverage helps pay for damage to your vehicle from
non-collision incidents like theft, vandalism, fire, natural phenomenon, etc. (minus your
deductible).
Collision Deductible: If you are involved in an accident, this type of coverage helps pay for
repairs to your vehicle or replace it (minus your deductible and actual cash value of the car).

 Gazelle Car Insurance

 Good Car Coverage
 Bay Area Insurance
 There-4-U Car Insurance
 Captain Coverage
 Valley Car Company
 Comprehensive Direct
 Taylor & Sons Insurance
Matrices Test

97
The following questions are meant to assess your logical analyses and spatial aptitude. You will
be shown a sequence of shapes in a line or matrix and asked to select the shape that completes
the sequence. Below is an example.

Which option should come next in the sequence?

A. B. C. D. E.
Option C. is the correct answer.

1.

Which option should replace the question mark?

A. B. C. D.

E. F.

98
2.

Which option should come next in the sequence?

A. B. C. D.

E. F.

3.

Which option should come next in the sequence?

99
A. B. C. D.

E. F.

4.

Which of the following options completes the matrix?

100
A. B. C. D.

E. F.
5.

Which option should come next in the sequence?

A. B. C.

D. E.

6.

101
Which option should come next in the sequence?

A. B. C.

D. E.

7.

Which of the following options completes the matrix?

A. B. C. D. E.
8.

102
Which option should come next in the sequence?

A. B. C. D.

E.
9.

Which of the following options completes the matrix?

A. B. C. D.
10.

103
Which option should come next in the sequence?

A. B. C. D. E.
Survey Portion
Instructions: Recall the car insurance plan you chose. Read each of the following statements
and decide how much you agree or disagree with each according to your feelings and experience
when choosing car insurance.
1. “I am relieved that the task is over.”
2. “I am satisfied with the choice that I made.”
3. “I felt capable of processing the information given to me.”
4. “I could distinguish the differences between options presented to me.”
5. “Given the opportunity, I would change my decision.”
6. “I felt confident when making my choice.”
7. “After facing this decision, I feel confident making other important financial decisions.”
Each participant was given the following options for all of these questions:
 Strongly Agree
 Agree
 Neither Agree or Disagree
 Disagree
 Strongly Disagree
The following screen prompts you to answer a series of survey questions. If you feel
uncomfortable answering any of these questions, just select “prefer not to respond.”
When asked to select a car insurance plan, did you prioritize cost or coverage?
 Cost
 Coverage
 Neither
 Prefer not to respond
Do you currently own, rent, or lease a car?
 Yes
 No
 Prefer not to respond
Have you ever purchased car insurance?

104
  Yes
 No
 Prefer not to respond
How much research have you done on car insurance?
 Extensive research
 Some research
 Very little research
 No research at all
 Prefer not to respond
What is your age?
 [Input]
Which of the following describes your gender?
 Male
 Female
 Transgender
 Other
 Prefer not to respond
Which of the following best describes your ethnicity?
 White
 Black/African-American
 Hispanic/Latino
 Asian
 Middle Eastern
 Other
 Prefer not to respond
What year are you in your undergraduate education?
 Freshman
 Sophomore
 Junior
 Senior
 Prefer not to respond
In terms of your family’s economic status, how would you classify yourself?
 Upper class
 Upper-middle class
 Middle class

105
  Lower-middle class
 Lower class
 Prefer not to respond
In the past 6 months, how often have you struggled to pay for basic needs (housing, food,
transportation)?
 Always
 Often
 Rarely
 Never
 Prefer not to respond
How often do your parents/guardians struggle to pay for basic needs (housing, food,
transportation)?
 Always
 Often
 Rarely
 Never
 Prefer not to respond

Thank you for completing the experiment. Please leave the window open and return to
check-in.

106
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