Rotman Management — Spring 2017

110 / Rotman Management Spring 2017

are finite information processors, we think about things one

at a time.

So, when somebody says, ‘Would you rather buy a new

car or save for your retirement?’, you will evaluate those op-

tions one at a time. First, you will ask yourself, ‘What argu-

ments are there for buying the car?’ and then, ‘What is the

argument for saving for my retirement?’ This approach

would be fine, if it didn’t matter in which order you asked

yourself these questions, but we found that the option you

consider first has a huge advantage.

When you start to think about, ‘What is good about the

first option’ (buying the car), it temporarily inhibits argu-

ments against buying the car or more generally, arguments

for other options. Then, when you turn to considering the

second option (saving for retirement), those initial argu-

ments are temporarily inhibited, so they have a harder time

coming to the surface. That’s why, all other things being

equal, the first option you look at has such a huge advantage.

Of course, marketers have known this for a long time —

which is why they are always so keen to direct our attention

to the option they want us to buy.

In terms of how people make decisions with respect to

environmental concerns — the core of your current re-

search — are you a fan of mandated changes to the status

quo, or choice architecture interventions?

It doesn’t have to be either/or. In any complicated context —

making decisions about retirement savings, climate change,

or what to eat — there is a conflict between doing something

that benefits us now vs. doing something that benefits us in the

future. As indicated, people tend to focus too much on the

here and now, because in simpler times, it was all about sur-

vival; the future didn’t matter as much. But these days, as we

live longer, the future does matter: None of us wants to be

obese in 20 years’ time; we want to have enough money for

a comfortable retirement; and we want to leave the earth in

an inhabitable fashion for future generations. But because of

our in-bred myopia, we can’t simply depend on ordinary citi-

zens to make the right decisions intuitively and instinctively.

Both of the options you mentioned — mandating chang-

es to the status quo and choice architecture interventions

that ‘nudge’ people to do what is in their long-term inter-

est — are viable ways of helping to overcome human myo-

pia. Of course, the feasibility of mandated change depends

somewhat on the political context. In an environment where

mandated change is not feasible, choice architecture inter-

ventions are certainly a great tool, as peoples’ autonomy is

not restricted. The research shows that in many cases, nudg-

ing people in the right direction can achieve the same goals

as mandated change.

On that note, both ‘carbon taxes’ and ‘carbon offsets’ are

carbon user fees, but the two have very different conno-

tations for people. Please discuss.

This gets us back to Query Theory and the importance of

which option is considered first. The million-dollar ques-

tion is, what determines which option people consider first?

One important answer to that is, the default gets considered

first. That can be a default in the sense that you have been

Climate change is an example of a behavioural

perfect storm.

‘Fixing’ climate change will take decades. The problem

is, humans don’t like to pay costs up front.

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