Nudging is not just Automatic: Freedom of Choice and Informative Nudges

In the last ten years, there has been a global rise of behavioural informed policies and increasing attention from different disciplines on nudges application. The normative debate has been prominent and mainly dominated by the opposition between the ones who defend that nudging respects freedom of choice and the ones who support that it is coercive and manipulative. On individual decisions concerning public goods, bounded rationality plays a significant role. When information is costly to obtain, because of finite cognitive resources and arbitrary choice architecture, it may be rational for agents to act on incomplete information and ignore long term consequences. Nevertheless, individual decisions, as a result of bad choice architecture, have a huge impact on aggregate results causing some major public problems that should be a priority to solve through institutional design. In this paper, we argue that critics who defend the coercive nature of nudging tend to consider only nudges addressed to system 1. However, nudging is not just automatic. Our thesis suggests that, in contexts of bounded rationality, what we define as informative nudges, designed to deal with system 2, should seek to shape individual decisions through improving the deliberation process, therefore, skipping coercion and providing freedom of choice rather than uninformed freedom. To support the main argument, the article provides several informative nudges examples and discusses their implications on individual decisions and aggregate results. Finally, we conclude that informative nudging emerges as a new and complementary policy tool, which operates at the individual level and acts as a way to avoid problems rather than solving them once they are already public challenges.