The Problem With Behavioural Nudges

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.

Leaders from five businesses share what running a company has taught them — and why the reality hasn’t always matched their expectations.

Leadership can look very different from the outside. Behind the title are difficult decisions, competing demands and the challenge of knowing when to speak, when to listen and when to change course.

From digital marketing and wearable technology to property, pool care and dental technology, these business leaders share the lessons nobody prepared them for.

Sabri Suby, King Kong

Sabri Suby launched digital marketing agency King Kong in 2014 with $50 and a laptop, working from his home in Byron Bay. A regular on the Australian Financial Review’s Young Rich List, he is also a bestselling author, a former Shark Tank Australia investor and a father of three.

“The biggest misconception about being a CEO is that you won’t have a boss. People think, ‘I want to start my own company so I can be the CEO and be my own boss.’ Little do they know that you start working for 10, 20, sometimes hundreds of bosses. Nothing is more important than delivering for your client, and you’re held accountable to them every single day.

“With my team members, I never refer to them as employees. They don’t work for me; they work with me. The whole idea of the CEO as the big boss at the top is completely false.

“Company building is one of the most creative endeavours there is. If you’re a builder, and you love building systems, teams, products and services — all the things I love to do — then it’s the ultimate canvas.

“Great leaders think of their company as a living organism. You have to do what’s best for the whole organisation. That means making the hard, unpopular decisions. As a leader, you have to zoom out and optimise for the overall health of the organisation, and then sometimes carry the weight of being misunderstood while you do it.

“The lid on any organisation is the founder’s ability to think big. You can point to countless businesses in the smallest, boring niches that became enormous, billion-dollar companies purely because the founder was able to conceive it before they could achieve it.

“Early in my career, I had a bad case of shiny object syndrome. I was under the false belief that the more opportunities I pursued and said yes to, the more I’d increase my surface area of luck. It’s actually the opposite. Focus is what increases your luck: your ability to concentrate on the few things that really matter and say no to everything else.”

Nicky Zhu, Dymesty

Growing up, Nicky Zhu wanted to be an archaeologist. Instead, her career in wearable AI has involved digging through layers of technological complexity. At smart-glasses company Dymesty, she has learned that leadership requires conviction, honest feedback and the courage to be challenged.

“Nobody tells you that leadership at a startup means making decisions with conviction while privately questioning every single one of them. The hardest part of leadership isn’t the technology, the fundraising or the competition. It’s the loneliness of being the person who has to project certainty when certainty doesn’t exist.

“Your team doesn’t need you to be right. They need you to be decisive. I’ve made calls that turned out wrong — killing a product feature three weeks before launch, restructuring our supply chain partnership mid-production — and the team recovered. What they couldn’t recover from was the quarter I hesitated.

“I delayed a critical hiring decision for six weeks because I wasn’t sure we could afford the role. That hesitation cost us a product development cycle and sent a signal to the team that I didn’t trust our own trajectory. The damage from indecision was worse than any bad decision I’ve made.

“As CEO, you will often be the last person to hear the truth. The day you take on that role, the quality of honest feedback you receive drops by half. People filter. They soften. They tell you what’s working and route around what isn’t.

“I learned to build what I call ‘truth channels’ — one-on-one check-ins where I explicitly ask each team member to tell me one thing that’s broken and one thing I’m wrong about. The first two months, I got polite deflections. By month four, I was getting the kind of direct feedback that saved us from shipping a product with a critical UX flaw nobody had escalated.

“Your job isn’t to be the smartest person in the room. It’s to make the room safe enough for the smartest person to speak up. I’ve watched technically brilliant engineers sit silent in meetings because the culture rewarded agreement over dissent.

“The moment I started publicly rewarding the person who challenged my thinking — not just tolerating it, but thanking them in front of the team — the quality of our product decisions improved measurably.

“Leadership isn’t a skill you develop and then possess. It’s a practice you repeat daily while constantly discovering new ways you’re getting it wrong. I genuinely love that there’s no finish line. It keeps the work alive.”

Nic Brill, Poolwerx

Nic Brill began competitive swimming at six in his home country of South Africa. Perhaps fittingly, his career eventually led him to Poolwerx, the pool and spa maintenance business founded in Queensland. He became its Australia and New Zealand CEO in 2022 and global CEO in October 2025.

“My background in swimming meant I learned early on that while individual discipline and pushing beyond your limits are essential, you cannot achieve sustainable global scale alone. One of the toughest lessons I’ve learned in business is that you can have the most brilliant strategy in the world, but if you don’t cultivate the right culture and build a capable, resilient team around you, execution will falter.

“Resilience isn’t just about enduring tough times — such as navigating pandemics or economic downturns — it’s about having the humility to listen to your network and the agility to pivot when necessary.

“People often assume a CEO has all the answers and makes every important decision. The reality is very different. My role isn’t to have all the answers. Leadership is about listening, learning and continually adapting, not having all the answers from day one.

“As a leader, particularly within a franchise model, my job is to clear the path for others to succeed. At Poolwerx, our number one KPI is franchisee profitability. The biggest misconception is that the CEO is at the centre of the business, when in truth, our franchise partners and clients are at the centre.

“I’ve never felt that people work for me — people work with me. And because they work with me, that doesn’t mean that I’m ultimately the person who makes the call. I genuinely want to hear their views because I do believe that if we’re in it together, everyone’s combined input will make for a better outcome.

“What I love most about what I do is the impact we get to have on people’s lives. On one hand, I get to see our franchise partners build thriving businesses, and on the other, we help families everywhere safely enjoy their backyards and create lifelong poolside memories together.

“Understanding your purpose in life — not just work — and genuinely knowing you’re not the star of the show are things I try to value every day.”

Nat Gordon, Propoholic

Nat Gordon co-founded her first real estate agency at 21 and owned and operated a boutique Sydney agency for two decades. Today, as founder and CEO of independent property advocacy business Propoholic, she guides clients through buying, selling and renovating.

“I’ve owned real estate and construction businesses for 30 years, and I still make decisions every day without knowing how people will respond. In property, nothing is guaranteed, so you consider everything you know, trust your instinct and make the best decision you can.

“The hardest part of leading people is that no two people are wired the same way, so your approach is constantly changing. Every person — whether a team member or a client — is going through something different, even if the situation on paper looks the same. Listening well and genuinely caring change the quality of every conversation and always improve the outcome.

“The ideas that come to me in the peace of the night are often far better than those from the noise of the day. Our clients are trusting us with their biggest financial asset, and I don’t take that lightly. If lying awake thinking through another scenario helps them achieve a better outcome, I don’t see that as a bad thing.

“One lesson I’ve learned is that you won’t make everyone happy, and trying to do so will make you unhappy. Early on, I wanted every client to leave the conversation happy. Now I understand the right advice is sometimes advice nobody wants to hear.

“I think good leaders don’t pretend to know everything. It’s OK to admit that you aren’t sure about something, and people respect you more for acknowledging that. You have to seek answers and be willing to learn, often from the smart people you surround yourself with.”

Alexis and Luke Withers, Aalto

Husband-and-wife team Alexis and Luke Withers are co-CEOs of Australian dental technology company Aalto, whose clear aligners are manufactured in Sydney. They set out to make orthodontic treatment simpler and more accessible — and along the way discovered what it takes to lead a business together.

Alexis: “Nobody ever told me that leadership often means walking away from things that are working. One of the biggest decisions we made as founders was to step away from a successful business model despite achieving 312% revenue growth between 2020 and 2025.

“On paper, it made very little sense. But after thousands of patient interactions, we could see where customer expectations and the industry were heading. Leadership isn’t just protecting what you’ve built; sometimes it’s having the conviction to disrupt yourself before somebody else does.

“Another thing no one tells you is that being right matters less than listening. Some of our biggest strategic decisions came directly from customer feedback. Founders can become attached to their original vision, but customers often spot changes in the market before you do. Leadership is having the humility to listen when the evidence tells you your assumptions are wrong.”

Luke: “The traditional sole-CEO structure dominates the corporate landscape, so there weren’t many places to look for examples. What I have come to realise is that your co-founder should challenge you, not validate you.

“On paper, we probably shouldn’t work as founders. Alexis is analytical, methodical and naturally risk-aware. I am instinctive, ambitious and like to move quickly. We rarely approach problems the same way, but over time we’ve realised that tension is one of our biggest strengths. The best decisions usually happen somewhere in the middle of our opposing viewpoints.

“And nobody tells you that running a company with your spouse means there is no off switch! People love the idea of building a business with their partner, but nobody talks about the fact that board meetings happen over dinner and strategy conversations happen on holidays.

“We’ve had to become very intentional about separating founder time from husband-and-wife time, which we still struggle with to the detriment of our friends and family!”