Dark Nudges

by vonNudge

Cosmologists have recently postulated the existence of “dark matter”, an as-yet unobservable substance, which nevertheless is thought to comprise most of the universe’s mass. The existence of dark matter is generally agreed upon, and yet questions remain about its composition and how to detect it. This article argues that a similar, and also extremely prominent, “dark”, version of a well-known phenomenon has been lying nearly undetected by behavioural scientists for some time.

Richard Thaler and Cass Sunstein’s Nudge proposes that small changes in representation, default options, or problem complexity can have a large impact on behaviour. Organ donation is perhaps the most famous example. Organ donation rates vary spectacularly between countries, standing at, for example, 12% in Germany and 99% in Austria. These are two similar countries, so it seems unlikely that such a difference in donation rates is caused by a difference in cultural norms. Instead, it turns out that the default rules are the biggest driver of donation rates: countries with high donation rates force non-donors to voluntarily opt-out, whereas countries with low donation rates force donors to actively opt-in. A simple “nudge”, therefore, to increase donation rates is to move to an opt-out system. This is one example of Thaler and Sunstein’s “paternalistic libertarianism”: a way of increasing social welfare without the use of diktat and by preserving individuals’ rights to choose. The idea has caught on with policy-makers – the UK government being just one example, setting up the Behavioural Insights Team in July 2010.

Perhaps unsurprisingly, Nudge is overwhelmingly concerned with how such techniques can be used for good. Only two pages near the end of the book are devoted to “evil nudgers and bad nudges”. And their concerns are mostly about policy-makers in the public-sector being captured by private-sector interests, or incompetent nudgers who design poorly-conceived plans. I’ll try to argue, using a few examples from my own experience, that dark nudges are surreptitiously prevalent in the private-sector, are specifically targeted with an intention to confuse and mislead, and are often highly sophisticated in their use of psychological theory to nudge us in a way that often hurts the least informed and most in need of protection.

Firms have long known the power of default rules, most visibly shown in the fast food industry. The documentary maker Morgan Spurlock’s film Super Size Me followed his 30-day diet on only McDonald’s food. One of his rules was to always answer yes to the question, “Would you like that super sized?” These extra-large portions were used as a default rule by the chain: customers would never be asked, “Would you like that in small?” It seems clear that a default rule of larger portion sizes is an easy way to increase consumption of unhealthy foods, in a way that adds to both the company’s bottom line and the size of customers’ waistbands. The super size option has since been discontinued; but walk into any fast food restaurant and order a portion of chips, it’s likely that you’ll be asked whether you’d like that in large.

Amazon.co.uk are also guilty of using a self-serving default rule instead of one that may benefit their customers. Products from their store can be delivered in at least three different ways (see below). Their free shipping option is the slowest, usually taking around four days. Customers can pay extra to have their items shipped by two faster methods (First class costs £2.80 for a paperback book). First class is also the default rule. Now, there isn’t any data to back this up, but it’s almost certain that the majority of Amazon’s customers prefer free shipping for the majority of their purchases. How many people want to pay £2.80 to get a £5 paperback two days earlier? If free shipping was an appropriate default rule, then why don’t Amazon use it? The answer probably is that Amazon make a higher profit margin on items that have paid-for shipping, and hope that using their lowest paid-for shipping option as a default will nudge some people – often through sheer laziness – into a selection that makes Amazon better off. There are two other less self-serving options which Amazon could easily take here: either make free shipping the default (presuming it is the most commonly selected by their customers), or use mandatory choice (where there is no default rule and customers must choose).


Here are two more dark nudges, coming straight from the pages of Nudge. Magazine providers often offer new subscribers an introductory discount or several issues for free. What they make less clear is that such an offer comes with an automatic subscription to the magazine at full-price after the introductory offer has lapsed. Unsubscribing from this default rule takes voluntary effort, which many customers may be unable to find time for, even if they rarely read the magazine. Installing software often involves a number of choices about the installation of optional features. Some software providers set their defaults helpfully based on their average customer’s needs. Other software providers are less helpful. Often free tools will come with secondary programs to be installed as default. These secondary programs have nothing to do with the original program, they only serve to generate advertising revenue, often as internet browser-based search bars (see below). It is the least sophisticated users who end up installing these extra programs, and cluttering up their computers, merely because they were chosen as a default during what can be a confusing process.


The psychology of probability judgements has produced a massive literature over the last few decades. It is impossible to summarise that literature here, but one finding has often been displayed: people are bad at reasoning about the conjunction of two or more events — that is, the probability of two or more things happening together. An early paper by Amos Tversky and Daniel Kahneman actually found a “conjunction fallacy”, where the probability of two events happening together was judged to be higher than one of those events happening on its own. This of course is in violation of the laws of probability. The examples in their paper follow a simple pattern: adding a high-probability second event can lead to a higher perceived probability of both of those events occurring than the first event happening at all. One of their examples comes from tennis. Bjorn Borg was then an incredibly strong tennis player, having won Wimbledon five times in a row in 1980. 72% of Kahneman and Tversky’s participants judged it more likely that Bjorn Borg would lose the first set of the Wimbledon final and win the match, than him merely losing the first set! Here, the second event of Borg winning the match both seems likely and there may be many examples of it stored in memory, so it pulls up the perceived probability of the conjunction until it appears more likely than Borg losing the first set – a result which cannot be true.

Betting firms appear to have become extremely adroit at exploiting bettors’ perceptions of conjunctions. It isn’t necessary for them to induce actual conjunction fallacies (something which is more important in the world of academia), only for them to create a misperception which can increase the total number of bets wagered, or induce bettors to place bets which have a large negative expected payoff. Betting firms’ advertising in the UK, both in their shop windows and during televised sporting events, has begun to follow a simple pattern. Their advertised bets almost always involve a conjunction of events, such as a certain football player scoring next, or a team winning by a certain scoreline. Second, their bets almost always involve at least one event which seems likely. It could be a star striker, such as Robin van Persie scoring next, or a leading team, such as Manchester United winning 3-2. This almost exactly follows the pattern of Tversky and Kahneman’s experiment. But although Robin van Persie might be quite likely to score in isolation, there are a number of ways that he might fail to score next. Perhaps another leading player will score the next goal, or van Persie might fail to score this game before bagging a hat-trick next match. This pattern is so widespread amongst betting firms that it must be considered a dark nudge, one that almost perfectly replicates an academic experimental finding on a grand scale, serving only to deplete gamblers’ pockets just a little bit faster. Next time you walk past a betting shop window, or sit through the half-time advertising break on T.V., just observe the bets on offer. The bet will almost always involve a leading player scoring, or the superior team winning, and another event happening.

Another example, which is absolutely stunning in terms of its abuse of a number of biases in judgement and decision making, comes from a home improvement firm which advertises heavily on UK television. Home improvements are something which most people will purchase only rarely, it is also an area where most consumers depend on a high level of trust between them and their contractor. Many small contractors are frequently outed on T.V. Programmes as “cowboy builders” for performing overpriced and substandard work. This example is in my view more insidious, as it comes from a large firm which is intent on creating a positive public image, and uses a number of sophisticated psychological techniques.

Perhaps the first warning sign is that this firm’s advertising and promotional literature contain no actual prices. Instead, interested consumers are paid a visit from a salesman – an example of the “foot in the door technique” popularised in Robert Cialdini’s Influence. That salesman first makes the consumer watch a promotional video while he “calculates their quote”.

An example of their quotations is shown below. Note first of all that it comes with no simple single number, as you might expect. Instead, the consumer is subjected to a dazzling array of information designed purely to confuse. This particular quotation was for a pair of aluminium French doors, and an aluminium front door and side window, a job which should cost no more than a few thousand pounds.


The first figure shown, the “GROSS LIST PRICE inclusive of VAT”, is a very large number: £11,637. This is an example of an anchor, another one of Tversky and Kahneman’s findings. They found that implanting a piece of information early in the decision process can have a large effect on subsequent judgements. Specific to this example, using a high anchor can increase the perceived fair price of an item. Of course in this example, not only is the anchor at a grossly overvalued price, but so is the final price: £6,429. The anchor serves merely to make the latter seem like a steal.

Four separate discounts link these two prices. This exploits one of Richard Thaler’s (co-author of Nudge) early findings: mental accounting. This theory asserts that the way people mentally code gains and losses can ultimately have a larger effect on behaviour than their actual economic content. Using prospect theory (also from Tversky and Kahneman), gains are coded as having a diminishing effect on utility. A gain of £1,000 is not quite as good as two gains of £500. Therefore, splitting one large gain into several smaller gains will make consumers feel happier about their lot, even though economically the two situations are identical. Splitting the total discount into four separate discounts has the same effect in this situation. The consumer sees one discount, then another, and another, and then one more! The final price must be a bargain, right? Of course this is an illusion. Perhaps the sellers of this product are aware that the illusion only lasts for so long, so the final discount is a “10% immediate offer discount”, good for “one day only”. Another classic high-pressure sales technique.

The final four lines describe the company’s payment plan. You can choose a 120 month repayment plan (which sounds like a much shorter period of time than 10 years). The monthly payment is only £123.17, but over ten years this equates to £14,780, or an implied interest rate of 22.32%. The salesman was pushing for the next payment plan, of £306.87 over 24 months, stating that it was “interest free” and came with a special discount in that it could be paid off after only 21 months. The penultimate line repeats the “10% immediate offer discount” presented above. The final line presents yet another “discount”, a bonus dividend of £578 after six months. One well-known finding in the psychology of decision making over time, hyperbolic discounting, states that we tend to place far too much emphasis on current rewards than future costs. Many well-known vices, such as alcoholism, procrastination, problem spending and insufficient saving for retirement can be neatly described by this framework. The consumer’s final impression from this sheet is that the product is a brilliant deal which they simply must order today. Little weight is given to the future costs of repaying the loan. And in fact the final “discount” of £578 is facetious. 21 monthly repayments of £306.87 comes to £6,444.27 – greater than the account balance of £5,897. The loan is in fact only interest free if you include that final “discount” of £578. Simple arithmetic, but something few people are likely to check.

These last two examples of dark nudges are likely just the tip of a huge iceberg. They use classic findings in psychology to dazzle and confuse consumers into thinking a product or service is a much fairer deal than it really is. Scores of other examples surely lie under the surface. In these troubled times a huge industry of payday lenders and other legitimised loan sharks has sprung up to exploit the worst-off amongst us. Thinking about the topic, such businesses have little incentive to offer their customers a fair deal. Instead they have every incentive to obfuscate their true cost and force themselves upon people who are already struggling to get by. Similar to the postulated “dark matter” in cosmology, it would be little surprise if the incidence of dark nudges greatly exceeded the amount of helpful nudges in our universe.