29 Jun 2020

There has been, according to previous UK´s Prime Minister David Cameron[1], the erroneous assumption that people´s behaviour can only be changed through rules and regulations.

This is a presumption that many companies have when it comes to controlling the behavior of their employees and inducing that of their clients.

There are, however, other regulatory techniques – complementary to rigid rules – that can motivate employees and clients to make better decisions and follow certain patterns of behavior favorable to the company.

I am referring to ‘Nudge’, a term created by Richard Thaler and Cass Sunstein[2], which is based on the philosophy known as ‘libertarian paternalism’[3].

Nudge is a technique that applies behavioural science[4], consisting of structuring choice architecture[5] to ‘encourage people to make better choices for themselves and society’[6].

The strategy has been used in various areas like financial services[7], tax, healthcare, crime reduction, and it is currently being used quite a bit to avoid the expansion of COVID-19.

This regulatory strategy is, I contend, ideal for the business world, since with its application companies can achieve the motivation of their employees and of their clients without them feeling that the behavior resulting from the motivation is an imposed activity, generating, therefore, a greater predisposition.

Examples of nudge include, for instance, a default rule according to which all citizens are organ donors unless they register their wish not to be[8] or the typical reminders used in cigarette packs about health damage caused by smoking[9]. Another example is the recent application in Paraguay of the “Photo-fines” on the Costanera[10] that definitely makes drivers voluntarily reduce speed because they know that “it is in their best interest to do so”.

The idea is to influence people’s decisions towards the sensible course of action, with the condition that decision-makers remain free to ‘behave as they, rather than authorities, see fit’[11].

There are several tools[12] for nudging as well as different degrees[13], which vary depending on the level of impact on an individual’s autonomy.[14]

In what follows I will suggest some techniques that can be used in the business environment to nudge employees:

  • Information mechanisms[15]

This is a tool that tries to inform people about the consequences of their actions or to present options in a manner that encourages them to make the ‘better’ decision, by showing them the benefits that come with it[16].

It can be used, for example, to inform employees that entry time is at 8:00, and suggest that they arrive 10 minutes early to find shaded parking and avoid traffic. This could be done with informational posters illustrating an employee arriving at 7:50 and who, by arriving early, found shady parking, avoided traffic, and marked their entrance without queuing.

This is a simple example of how information, properly presented, can be quite effective.

  • Persuasive, campaigning and counseling[17]

Another interesting tool within the Nudge strategy is to carry out persuasive campaigns.

Imagine, for instance, that your company wants to incentivize their employees to cut down on paper for environmental reasons – and why not – to reduce unnecessary costs.

One way to do this is by conducting persuasive campaigns, where the benefits of recycling are demonstrated with statistical data or shocking images of the harmful effect of paper misuse.

Reminders can also be a very effective tool for nudging employees.

Many employees may forget what some of their job obligations are under the contract signed or under the labor code.

Few of them handle this type of information accurately, so reminders about what their obligations are and what the applicable sanctions are in the event of non-compliance, could be extremely effective.

  • Physical architectures/Designs[19]

Another Nudge tool is the implementation of architectural designs that facilitate and promote certain behaviors.

For example, one way to encourage employees to use stairs and avoid elevators, in order to promote physical health and combat sedentary lifestyle in offices, is by placing accessible stairs and by placing elevators well away from access points. With this, employees will be driven to take the stairs and avoid excessive use of elevators.

This is just one example of the thousands in which the structural design can be applied to promote certain behavior desired by the company.

In short, there are several Nudge tools that can be applied by companies to facilitate the fulfillment of obligations by employees and to induce the behavior of their clients.

Rigid rules have always been – and will continue to be – an essential tool for the control of human behavior, but their effectiveness can be greatly increased if they are accompanied by other regulatory techniques more receptive to the general public.

Nudge is not the only regulatory technique that can be used as an alternative or complement to rigid rules. There are others such as “Incentive-based regulation”, that are also highly beneficial in directing employees’ and clients ‘behavior more effectively.

If you are interested in applying complementary regulatory techniques, such as Nudge, in your company, contact Felicita Argaña (fargana@altra.com.py), Altra Legal´s Attorney at Law.


[1] David Halpern, Owain Service and The Behavioural Insights Team, Inside the Nudge Unit – How small changes can make a big difference, (London: WH Allen 2015), p. 38.

[2] Christopher McCrudden, Jeff King, op.cit., p. 68.

[3] David Halpern, Owain Service and The Behavioural Insights Team, op.cit., Foreword by Richard Thaler.

[4] Nudge techniques started being used in the United States with President Obama’s administration and in the United Kingdom with Prime Minister David Cameron administration, where the Behavioural Insights Team became founded. See: David Halpern, Owain Service and The Behavioural Insights Team, op.cit., pp. 9-10. Also: <https://www.behaviouralinsights.co.uk/> accessed 14 July 2018

[5] Cass R. Sunstein, Why Nudge? The Politics of Libertarian Paternalism, (New Haven, Connecticut; London, England; Yale University Press 2014), p. 15.

[6] <https://www.behaviouralinsights.co.uk/> accessed 14 July 2018

[7] Alberto Alemanno, Alessandro Spina, “Nudging legally: On the checks and balances of behavioral regulation”, International Journal of Constitutional Law, 12(2) [2014], p. 2.

[8] <https://www.politico.com/agenda/story/2015/10/obamas-effort-to-nudge-america-000276> accessed 14 July 2018

[9] Robert Baldwin, “From Regulation to Behaviour Change: Giving Nudge the Third Degree”, Modern Law Review, Vol.77(6) [2014]

[10] https://www.abc.com.py/nacionales/2019/09/16/fotomultas-en-la-costanera-de-asuncion/

[11] Robert Baldwin, Martin Cave, Martin Lodge, op.cit.

[12] Robert Baldwin, op.cit.

[13] Robert Baldwin, op.cit.

[14] Robert Baldwin, op.cit.

[15] Robert Baldwin, op.cit.

[16] Robert Baldwin, op.cit.

[17] Robert Baldwin, op.cit.

[18] Robert Baldwin, op.cit.

[19] Robert Baldwin, op.cit.