Putting the 'Mental' into the Governmental: How Can Nudges Improve Shock Coping?

Marco Lehmann-Waffenschmidt; Burak Erkut

doi:10.62374/5vskke25

Authors

Marco Lehmann-Waffenschmidt Technische Universität Dresden
Burak Erkut Technische Universität Dresden

DOI:

https://doi.org/10.62374/5vskke25

Keywords:

Nudge, Behavioral economics, Hayek

Abstract

Nudging individuals towards improved decision making that serves their interest best is in vogue, not only among governments of the rich economies. It has also received growing interest from development agencies and development economists. Different experimental studies in developing countries have tested the impact of nudging on behavior. While these studies have mostly taken place on an empirical ad-hoc basis, our contribution proposes a theory-led reflection of the limits and potentials of nudging, with the aim to empower agents coping with external shocks such as droughts, floods, and earthquakes. We make use of Hayek’s cognitive theory to point out how behavioral mechanisms may respond to nudges, and address normative concerns.

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