Alter by people’s failure to take any

Alter the environment in which decisions are made so that
people are more likely to make choices that lead to good outcomes. It is to
structure work to encourage good decision making. There are two main causes of
poor decision making: inadequate motivation and cognitive biases. Approach
consists of five basic steps: (1) understand the systematic errors in decision
making that can occur- Understand how decisions are made. There are two modes
of information processing and then decision making. System 1 is automatic,
impulsive, and quite emotional. System 2 is slow, logical, facts based and

, (2) determine whether behavioral issues are at the heart
of the poor decisions in question – Starting by defining the problem. Behavioral
economics tools are most effective when: Human behavior is at the core of the
problem. People are not acting in their own best interests. The problem can be
narrowly defined, and sometimes it is not due to behavioral problems but due to
certain other underlying causes, a clear understanding of those causes is

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 (3) Identifying the
specific underlying causes, Is the problem caused by people’s failure to take
any action at all? Do people take action, but in a way that introduces systematic
errors into the decision-making process? Answering to this question would
enable a better and clear understanding of the underlying causes

 (4) Redesign the
decision-making context to mitigate the negative impacts of biases and
inadequate motivation Use one of three levers: Trigger System 1 thinking by
introducing changes that arouse emotions, harness bias, or simplify processes.
Engage System 2 thinking by using joint evaluations, creating opportunities for
reflection, increasing accountability, and introducing reminders and planning
prompts. Bypass both systems by setting defaults and building in automatic

 (5) Rigorously test
the solution. Rigorously test the proposed solution to avoid costly mistakes.
Identify a target outcome that is specific and measurable. Identify a range of
possible solutions and then focus on one. Introduce the change in some areas of
the organization (the “treatment group”) and not others (the “control group”).