C1 Reading Test – Behavioral Economics: Nudges, Ethics & Regulation
Explore nudges and ethics in policy. C1 multiple-choice on assumptions, evidence, and unintended effects.
Read the passage and decide if each statement is True (T), False (F), or Not Given (NG).
“Nudges” are small changes to choice architecture—defaults, prompts, or presentation—that aim to steer decisions without removing options. Supporters describe this approach as “libertarian paternalism”: respect freedom of choice while correcting predictable biases such as inertia or present bias. A classic example is automatic enrollment into pension plans with the ability to opt out; many workers save more simply because the default no longer demands extra effort.
Yet ethical questions persist. If most people don’t notice the nudge, is consent meaningful, and does influence become manipulation? Transparency helps, but disclosure alone may not neutralize power imbalances between institutions that design environments and individuals navigating them quickly. Moreover, nudges that work on average can hide distributional effects: a reminder to pay fines might reduce arrears overall but impose relatively larger burdens on people with volatile income. Effect sizes also vary by context; what succeeds in a lab or a high-trust agency can disappoint when scaled or in communities with reasons to doubt authorities.
Regulators face a moving target. Some nudges are benign—clearer labels, simpler forms—while others blur into “dark patterns,” design that exploits biases to extract money or data. Drawing the line requires criteria: purpose (public interest vs. private gain), reversibility (how easy is opting out), and evidence (was the intervention tested, with whom, and for how long?). A prudent toolkit includes pre-registration of trials, independent audits of outcomes and side effects, sunset clauses for underperforming policies, and stronger protections in domains where stakes are high (health, finance, children). Finally, nudges should complement—not replace—structural solutions such as fair pricing, adequate benefits, or safer default standards. Changing the frame can help, but sometimes the frame is the problem.
Nudges aim to influence choices without eliminating alternatives.
Automatic pension enrollment is presented as an example of removing freedom of choice.
The passage claims that transparency always solves the ethical issues of nudging.
Distributional concerns mean a nudge can have uneven effects across different groups.
Interventions that work in laboratories may underperform when scaled.
All nudges are categorized as dark patterns in the text.
The passage provides a precise legal definition of “dark patterns.”
Suggested regulatory tools include pre-registered trials, audits, and sunset clauses.
The author argues nudges should fully replace structural policies like fair pricing.
In high-stakes areas such as health and finance, the text recommends stronger protections.