Throughout our daily lives, we like to believe our decisions are entirely our own. Yet subtle forces often shape those choices in ways we hardly notice. Seeing a salad bar as the first thing in a cafeteria can help you choose to eat healthily, or a spending alert on your mobile banking app may help you reconsider your next purchase. Often, this isn’t just a coincidence; it’s something called a “nudge”. It’s a research-backed way of using small changes to guide people toward better decisions and outcomes gently.

On a larger scale, nudges can even influence entire societies, such as how automatically enrolling employees in retirement savings plans boosts national savings, or how organ donation rates increase thanks to systems designed with a gentle push. Nudges are more powerful than we might realize, as we’ll explore further below.

What is nudge theory?

In economics, game theory is a mathematical framework for analyzing strategic interactions between decision-makers, such as businesses, consumers, and governments1. First conceptualized by John von Neumann and Oskar Morgenstern in 1944, this framework essentially examines how players anticipate and respond to each other’s actions, aiming to identify the optimal strategies across various situations, even in the face of uncertainty.

A straightforward example is the airline industry. When one major airline reduces fares on a major route, competitors often adjust their pricing or offer different incentives. This kind of interaction is usually found in aNudge theory is a behavioral economics concept that shapes decisions by designing the "choice architecture," the context in which choices are made.¹ Everyday options can be structured in ways that influence behavior without restricting freedom of choice. Operating under bounded rationality, people often decide based on biases and subtle cues in their environment rather than acting with perfect rationality.¹

The concept, rooted in behavioral economics, was popularized by American economist Richard H. Thaler and legal scholar Cass Sunstein in their 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness.² Since then, it has shaped fields ranging from public policy to corporate strategy, even with dedicated ‘nudge units’ established by governments worldwide.³ Thaler’s broader contributions to behavioral economics, including his work on nudging, were what earned him the 2017 Nobel Memorial Prize in Economic Sciences.⁴ oligopoly markets, sectors dominated by a few firms where each player’s decisions are heavily influenced by the anticipated moves of their competitors.

What are the characteristics of a nudge?

Nudges stand out because they shape behavior without imposing strict rules or relying on financial incentives.⁵ Instead, they draw on well-documented aspects of human psychology, such as the tendency to stick with defaults or the pull of social norms, to guide people toward decisions that can improve their lives. By adjusting the context in which choices are made, choice architects design nudges to influence outcomes while remaining almost invisible.⁵

Equally important, nudges never remove options.⁵ They are designed to be simple, low-cost, and easy to bypass. A cafeteria that places fruit at eye level is nudging; one that bans sweets is not. This approach embodies what Thaler and Sunstein describe as 'libertarian paternalism': the belief that it is possible to encourage better decisions while safeguarding individual freedom.⁶

What are real-world examples of nudge theory?

1. How nudges reshaped U.S. retirement savings

There are many powerful, research-backed examples of nudges in practice, including one that Richard Thaler himself has been directly involved in. In a 2013 Chicago Booth Review article co-authored with fellow American behavioral economist Shlomo Benartzi⁷, the two have shown that nudges, drawing on the broader field of behavioral economics, could help address the retirement savings crisis. Their research began in the United States, where, in the early 2010s, millions of workers risked entering retirement without sufficient savings. Roughly half of U.S. employees at the time (about 78 million) had no access to workplace retirement plans. Among those who did, procrastination, inertia, and behavioral biases often prevented them from enrolling or saving enough.⁷

The solution they proposed was to reframe the 'choice architecture' behind these plans.⁷ Their recommendations relied heavily on automation: (1) all workers should have access to payroll-based savings plans, (2) employees should be automatically enrolled, with the option to opt out, (3) default investment options should be pre-selected and adjusted over time, and (4) savings rates should increase gradually, especially when linked to pay raises, so employees save more without perceiving a loss in income.⁷

This approach led to the development of the Save More Tomorrow (SMT) program. The results were striking: in one company, participants increased their savings rates from 3.5% to 13.6% in under four years. Across employers, millions of workers joined similar plans, generating an estimated annual increase in savings of USD 7.4 billion at the time of the research.⁷ In subsequent years, the success of this program has inspired pension reforms in other countries, including the United Kingdom, New Zealand, and Australia, which have adapted automated features to improve retirement outcomes for their own workforces.⁷

2. How design and culture shape organ donation outcomes

Although there are successful examples of nudges, the results of putting them into practice aren't always straightforward. This is particularly evident in policies worldwide aimed at increasing organ donor registration, especially through opt-in or opt-out systems. Alongside other scholars and policy leaders, Cass Sunstein highlighted this point during a 2020 panel hosted by the Petrie-Flom Center at Harvard Law School.⁸

Opt-out systems: successes and complications

According to nudge theory principles, an opt-out system for organ donation might seem like the most effective way to increase participation, and it has indeed worked in several countries. Spain uses a soft opt-out system for organ donation, and as of 2024, it records one of the highest deceased donor rates in the world (donors per million population), often topping those rankings.⁹ Similarly, in Austria, about 90% of the population is registered as organ donors.¹⁰

However, Sunstein noted that the results of the opt-out mechanism are actually not uniform across the globe, citing the Netherlands as an example.⁸ When the law was passed in 2018 and came into effect in 2020, residents in the country were automatically registered as donors unless they explicitly opted out.¹¹ This sparked debate over awareness and consent, as some worried individuals might be enrolled without fully realizing it. While the system effectively registered the population, its impact on actual donation rates is still under evaluation.

Opt-in systems: cultural alignment in the U.S.

Conversely, opt-in systems, which might seem less effective at first glance, have also achieved success, particularly in the United States. As of early 2025, the US is second only to Spain in terms of deceased donor transplant rates¹², with 60% of the adult population eligible to donate¹³. Fellow panelist Alexandra Glazier, president and CEO of New England Donor Services, explained that this success can be attributed to the fact that an opt-in system aligns with American cultural values, which emphasize individual choice and independence.⁸

With this in mind, Sunstein notes that the key is not which system (opt-in or opt-out) is best, but how it is implemented.⁸ He identifies two key criteria for organ donation policies: they should aim to save lives while safeguarding individual autonomy, a principle that can then be adapted to fit the cultural context of each country.

Final thoughts: The true significance of nudges

Nudges play a much bigger role in our lives than we often think. Even though people might assume they will eventually make decisions without an intentionally designed choice architecture, Thaler argues that it's more than that. He likens nudges to a GPS, a tool that shows us how to get somewhere without dictating the destination.¹⁴

From these small interventions, nudges can ripple out to create larger impacts, as we've seen with retirement savings plans and organ donation systems. The potential is vast, and we will continue to see the effects these subtle, research-backed interventions can have on behavior and society.

To continue exploring nudge theory and related topics, visit UBS Nobel Perspectives & Economic Views for in-depth discussion and practical insight. This broader view also highlights the work of Richard Thaler and other Nobel laureates whose ideas help shape a more resilient and equitable future.

References

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  2. Thaler RH, Sunstein CR. Nudge: Improving Decisions About Health, Wealth, and Happiness. Penguin Books, 2008.
  3. European Commission.Behavioural insights. European Commission, 2025.
  4. Nobel Prize Outreach.Press release. NobelPrize.org, 2017.
  5. Tams C.Small is beautiful: using gentle nudges to change organizations. Forbes, 2018.
  6. Thaler RH, Sunstein CR.Libertarian paternalism. American Economic Review, 2003.
  7. Thaler RH, Benartzi S.Behavioral economics and the retirement savings crisis. Chicago Booth Review, 2013.
  8. Reichel C.Nudging organ donation in the United States. Harvard Law Today, 2020.
  9. IRODaT.Database. IRODaT, 2025.
  10. SPARQ.'Opt Out' Policies Increase Organ Donation. Stanford University, 2020.
  11. Jansen NE, Williment C, Haase-Kromwijk BJJM, Gardiner D.Changing to an Opt Out System for Organ Donation—Reflections From England and Netherlands. Transplant International, 2022.
  12. Harris N.Organ donation: which countries have the most and least organ donors?. William Russell, 2025.
  13. Donor Alliance, Inc.How many people are organ donors?. Donor Alliance, 2025.
  14. UBS.Richard H. Thaler: Perspectives on Nudge Theory & Behavioral Economics. UBS Nobel Perspectives, 2026.