The Problem With Behavioural Nudges - Kanebridge News
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The Problem With Behavioural Nudges

The benefits of steering people toward making better decisions has become conventional wisdom. But the evidence suggests it doesn’t work quite as well as we hoped.

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Mon, May 27, 2024 10:00amGrey Clock 5 min

The concept of nudging has become popular in the past few years—using psychological tactics to subtly steer people toward making better decisions that are aligned with their own interests or societal goals.

Companies and governments are using nudges, for instance, by automatically enrolling people in retirement savings plans instead of having them opt in, or by placing healthier snacks at eye level in a cafeteria or by comparing people’s electricity consumption with their neighbours’.

But as nudges became increasingly popular, we wondered: Can they go the distance? Would they keep people on track beyond the initial push, like actually eating healthier foods or saving more money or reducing their energy use over the long term?

We found that, in many settings, they don’t. Lots of people simply don’t follow through on options they have been nudged to choose—making those nudges less effective than many people believe. As the old saying goes, “You can lead a horse to water, but you can’t make him drink.”

Other research has shown this effect. In 2012, a team from Cornell University published research showing that more people grabbed healthy snacks—like apples and carrots—when they were placed in contexts that made them more convenient, such as being put at eye level, among other things. The finding got wide attention and helped spread the idea of nudging.

But another aspect of the experiment didn’t get much attention at all. Those Cornell researchers didn’t just measure what went on at the cash register. They also stuck around to see what people did with the food. The nudged people ended up eating the same amount of healthy food as the ones who weren’t nudged—and the extra that was taken because of the nudge was thrown in the garbage. In the end, the effect on consumption of healthy foods was nil.

“For a long time we had always included language in these published studies lamenting the lack of long-term studies to see exactly how long the effects would last,” says one of the researchers, David R. Just, a professor of applied economics at Cornell.

Just adds: “It makes some sense that nudges would be much more effective in the short term than in the long term. Choices like food that are repeated often over time lead to learning, and eventually people are likely to recognise how the environment is interfering with their choices. This may say that nudges are most important in one-time or rare decisions like organ-donor status.”

In the long run

To be sure, sometimes a nudge is better than nothing. Let’s say somebody who wouldn’t otherwise join a gym is nudged into becoming a member. In the end, that person probably won’t use the membership regularly, but might use it occasionally—which is better than not exercising at all. And nudges may be beneficial when people don’t have to follow up on their initial choice, such as a plan that automatically puts a part of each paycheck into a 401(k).

That is only some cases, though. In others, no nudging might actually be better than a nudge. For instance, somebody might want to choose to join a gym, and plans to attend three days a week. But if nudged into the choice, this person might go there much less.

But even when nudges are better than no nudges, we have found that nudges don’t provide nearly as much benefit as initial results indicate—or as much as many nudge proponents are counting on.

We conducted studies on three of the most popular nudge strategies. In one, we gave the participants a chance to sign up with a website to get daily trivia. We described one as a way to have fun, the other as a way to get smarter every day. In reality, everybody was directed to the same site, no matter which option they picked.

When we gave participants one website as a default—in other words, we nudged them to choose it—70% opted for it, compared with 48% who chose the same one when it wasn’t preselected. That’s typically how default nudges work: People are much more inclined to pick the default, which presumably will be the one that is best for them or society.

Next came the important part. We waited. We tracked how often the study participants visited their website membership over eight months. Those who were nudged to choose the default plan visited the site 42% less often than people who chose an identical plan without nudging.

This was true for people nudged with a default option, as well as people nudged with what’s known as a decoy: a deliberate dud that makes another option really shine. In this case, the dud was an offering designed for children. So, in effect, the default and decoy strategies had a positive impact on choice, but not on long-term actions. When we nudged participants into the program, they used it less than they would have at all if they hadn’t been nudged.

Another study that we conducted threw cold water on a nudge known as the compromise effect. Think of Goldilocks choosing a bed: Nudgers know that people make choices in the same way, preferring to avoid extremes. Let’s say a store is trying to boost sales of a product that gets high ratings but is considered too expensive. The store might try to nudge customers by offering another version of the product at an even higher price—so the original looks like a better deal.

In this study, we gave people the option of choosing a plant, and steered some of them toward a compromise option (a plant that wasn’t too flashy or high maintenance). As with the trivia website, everyone ended up getting the same plant, no matter which option they chose. But people who ended up with the plant by way of the compromise effect let theirs die 16% sooner than those who chose without a compromise option. In other words, the people who were nudged into the “Goldilocks” choice weren’t as committed to caring for the plant over the long term.

A better way

Why don’t people follow through on nudged choices? When people are subtly steered toward options, it can feel as if a decision happens on autopilot. This lack of conscious effort might lead people to feel disconnected from their choices, potentially reducing their engagement with them.

This raises all sorts of questions about social programs designed to help people make better choices. Although nudges can be a powerful lever to increase sign-ups, program organisers shouldn’t conflate the popularity of a plan with the amount of people who actually use it. As our studies show, nudges can increase the latter, but decrease the former.

Encouraging individuals to save for retirement through nudges, for instance, may boost initial participation rates but may not translate into sustained engagement or prudent financial habits over time. A nudge might get people to enroll, but it doesn’t make them feel ownership, like the choice was really theirs, so they don’t follow through as much.

In designing nudges, the focus should shift toward helping individuals follow through with their decisions, complementing nudges with strategies that promote sustained engagement and behaviour change. For instance, people get more motivated for tasks when you turn the jobs into games and let them share their achievements on leaderboards. (Think of the popularity of Wordle.) It feels good to have a streak and see how you stack up to others. We might be able to transfer those competitive elements to nudged choices: If you nudge people into saving for retirement, for instance, you could show them how their savings stack up against other people’s each week.

In the end, though, the main takeaway from our research is that nudges may be a great first step. But that’s all they are: a first step. Much of the hard work is what comes next.



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AI-powered travel agents are challenging online booking platforms, but Airbnb’s exclusive listings and direct customer relationships could give it an edge. Its next challenge: turning repeat guests into loyal customers through stronger rewards and innovation.

By David Wainer
Tue, Oct 13, 2026 3 min

AI agents like Muse can already find you the cheapest hotel room in Paris. But they can’t locate a cheaper version of that Catskills cabin you’ve been eyeing, because it might only be available on Airbnb ABNB -1.43%decrease.

Investors should pay attention to that distinction. When Meta Platforms META 3.38%increase launched its Muse agent last month, travel stocks including Booking Holdings BKNG -1.19%decrease, Expedia and Airbnb all fell sharply.

Airbnb, though, has a real chance to emerge as a winner from the upheaval. The catch: Its stock already reflects above-industry growth. To justify its valuation, Airbnb will need to turn repeat customers into loyal ones.

Online travel companies make much of their money by simplifying search and collecting fees on bookings. AI agents threaten that model.

But not all travel marketplaces are equally exposed. Booking and Expedia largely sell hotel rooms that travelers can also book directly or through competing sites. If an agent can find the same room elsewhere, it has little reason to favor either Booking or Expedia.

Booking and Expedia also sell sponsored listings that steer travelers toward particular properties. Wells Fargo estimates those will account for about 8% of Expedia’s revenue and a much higher percentage of profit next year.

Airbnb has more ways to adapt. More than half its listings are available only on its platform, and more than 90% of its traffic comes directly to its app or website.

The customer relationship doesn’t end after booking, either. Bernstein analyst Richard Clarke notes that 90% of Airbnb guests go on to message their hosts about arrival times, keys or local taxes, giving Airbnb a connection to both sides of the transaction.

How the companies have responded to the possible agentic future is telling.

Expedia quickly signed on as a Muse partner. Airbnb hasn’t, and Chief Executive Brian Chesky says AI chatbots have so far been a boon, sending customers to Airbnb’s website.

Chatbots might work for buying paper towels, he quipped at a Skift conference last month, but people enjoy planning trips. He argued that browsing dozens of homes isn’t something a text-based chatbot is well suited for.

Still, the AI jitters arrived just as Airbnb was persuading investors it deserved its pricey multiple. For years after its 2020 initial public offering, the stock—which trades around 25 to 30 times forward earnings—went nowhere. Investors saw a mature operator trading at a growth premium.

This year, Airbnb growth seems to be accelerating. The stock jumped in August after the company raised its full-year revenue-growth guidance with its second-quarter results. Wells Fargo analyst Ken Gawrelski credits a run of product improvements under a revamped leadership team.

Among the changes: letting guests reserve now and pay later, adding hotels, and a redesigned home page and app. Investors were also betting on what comes next, including thousands more hotels, car rentals and, eventually, advertising.

The irony is that some of those growth drivers push Airbnb closer to the kind of business Booking and Expedia run—the kind of business AI agents could threaten. Even if AI agents capture a large share of travel planning and booking, Airbnb would capture the demand. But it and others would slowly lose control over how customers find and choose properties.

That would undermine the advertising opportunity investors are counting on. The bigger point for Airbnb and other marketplaces is that losing control of customer acquisition could mean surrendering some of their pricing power and margins.

To bulletproof itself, Airbnb might look to another e-commerce giant that has so far kept AI agents at arm’s length: Amazon.

Like Amazon, Airbnb has a loyal customer base and hard-to-match supply. But it has nothing like Prime membership to make customers think twice before taking their business elsewhere.

That is where loyalty comes in. Business travelers stick with Hilton or Marriott because enough nights earn them perks. Leisure travelers rarely accumulate stays with one chain. Airbnb has millions of listings and plenty of repeat customers, but no broad rewards program. It has begun experimenting with credits on hotel stays, but it should make loyalty a priority, not just a promotion.

Airbnb also plans to launch its own AI agent next year. But travelers using an agent might still want it to search Airbnb, Vrbo, Booking and hotel websites alike, rather than limit itself to one company’s inventory.

Eventually, Airbnb might have to strike deals with agent makers, using its unique homes as leverage to negotiate favorable terms, says Gawrelski. Such deals, along with rewards for loyal guests, could over the long term eat into the company’s roughly 13% take rate, he adds. But if they bring in enough additional bookings, the trade-off could be worthwhile.

History offers a reason not to panic. The shift from desktop to mobile unsettled investors in Alphabet and Amazon, but both emerged as major beneficiaries. Companies with valuable assets can come out of a platform shift stronger, if they adapt quickly enough.

Airbnb has homes the bots can’t easily replace. Now it needs to give guests a reason to insist on booking them there.