A Level Economics AQA Practice Exam

What are nudges primarily designed to do?

1. Encourage risk-taking behavior

2. Shift behavior towards undesirable norms

3. Motivate people to act in alignment with social norms

4. Limit choices available to individuals

The correct answer is: Motivate people to act in alignment with social norms

Nudges are primarily designed to motivate people to act in alignment with social norms by subtly influencing their decision-making processes. The concept is rooted in behavioral economics, which recognizes that individuals often do not make decisions purely based on rational calculations but are also swayed by psychological factors and the context in which choices are presented. By leveraging social norms—shared rules or expectations about appropriate behavior—nudges can encourage individuals to adopt behaviors that are beneficial for themselves and society as a whole. For example, a nudge might involve presenting information in a way that highlights how many people are engaging in a desired behavior, such as recycling, which can increase the likelihood that others will follow suit. The design of a nudge aims to preserve individual freedom of choice while gently steering people towards better outcomes, contrasting with other options that either promote undesirable behaviors, encourage excessive risk-taking, or restrict choices entirely. The intention behind nudges is not to limit options but to enhance decision-making by framing choices in a way that aligns with positive social behaviors.