Big Brother is Nudging you! How consumer behaviour is influenced online

9

October

2020

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On first sight, the development of online purchasing brought advantages to all parties included. Sellers have the chance to sell their products to a larger crowd and reduced the reliance on brick-and-mortar stores which require high rents. The buyers had more offers and could easily navigate between the offers to compare prices and get the best deal.

 

However, the impacts of digital marketing and purchasing on consumer behaviour are yet to be completely analysed. Current research suggests, that humans appear to be way more vulnerable to hidden traps, trying to pull individuals into a purchasing decision, than previously believed. The process of pushing consumers subconsciously into a certain decision is known as digital nudging.

 

This can take many forms. It can come in the shape of making incentives more prominent, presenting certain information in more comprehensive ways than others, or making certain options the default (Weinmann et al., 2016). The latter is prominently used in the financial and insurance industry, where certain plans are pre-selected and need active user input to un-select. Social media networks also use digital nudges by rewarding sharing behaviour with incentives like badges or a certain status (Weinmann et al., 2016).

 

Digital nudging can have positive and negative implications (Weinmann et al., 2016). By setting the default option to donating organs in case of an accident, Johnson and Goldstein showed that nearly double the amount of individuals selected to donate organs (Johnson et al., 2003). On the other side, this means, that companies can exploit the apparent subconscious decision making of consumers. This raises severe ethical questions, as to what should be allowed and what not.

 

Currently, the situation as to how to regulate this is still rather blurry. Howells argues in his paper that most mainstream consumer transactions which are carried out online can be taken care of, through the usage and adaptation of current legal principles (Howells, 2019). However, he does stress the importance of acting upon the situation. Otherwise, any institution would have the potential to exploit consumers through the usage of web design features, luring consumers into purchasing decisions.

 

Beyond that, the applicability of those features does not stop. What about social media networks? Do platforms like Facebook or Twitter use these features to increase the user’s dependence on the platforms? Are there hidden effects which are yet to be discovered?

 

 

 

 

 

 

 

Bibliography:

 

Howells, G. (2019) “Protecting Consumer Protection Values in the Fourth Industrial Revolution,”Journal of Consumer Policy : Consumer Issues in Law, Economics and Behavioural Sciences, 43(1), pp. 145–175. doi: 10.1007/s10603-019-09430-3.

 

Johnson E.J., Goldstein D., (2003) Do defaults save lives? Science 5649(302):1338–1339

 

Weinmann, M., Schneider, C. and Brocke, J. V. (2016) “Digital Nudging,”Business & Information Systems Engineering, 58(6), pp. 433–436. doi: 10.1007/s12599-016-0453-1.

 

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Nationalise The Tech Giants! The Late Win Of Communism Or A Better Way To Handle Our Data?

8

October

2020

5/5 (1)

 

 

A couple of weeks ago, German TV show host Jan Böhmermann sat down for an interview with journalists from ARD concerning his new book. In his interview, he criticised how huge internet and telecommunications companies like Amazon, Google, or Facebook treat the data of individuals (Daserste, 2020). Such criticism does not seem to be much of a headline in a tech-sceptic European Union with strong data privacy legislation. His proposal, however, makes for a headline: a radical new way of thinking.

 

Nationalise Amazon, Google, and Facebook

 

Böhmermann proposed that companies controlling large amounts of very sensitive data (e.g. financials, interests, beliefs) have too much power to exist as ‘ordinary’ companies (Daserste, 2020). According to Böhmermann, these datasets are part of today’s essential infrastructure, however the people do not control these companies – nor the way their data is handled. The best way for the people to retain ownership of their data would thus be to nationalise the aforementioned companies. As an example, he uses the railroad services which were nationalized in the 19th and 20th century when they were an essential part of the national infrastructure.

 

Indeed, the data held by tech giants are very sensitive and consumers, depending on where they live, have varying degrees of control over their own data. The most problematic challenge for politicians and the legislative is the fact that no traditional instrument is known to make those players smaller and subsequently more controllable. This is due to the structure and dynamics of electronic markets. As their marginal costs are very small or zero, the tech giants can offer their services and software at no cost to the consumer (Shapiro et al., 1999). Furthermore, the offered services mostly gain in value when more people use the network, as can be seen from Facebook or Airbnb (Zhu et al., 2019). Logically, this means that the market will always develop into a monopoly and the state has no traditional instrument to interfere with this.

 

In light of this, Böhmermann’s idea sounds quite appealing. However, the idea is still in its very early phase with many question marks as to how exactly this could be realised. As opposed to railway companies which mostly operated in one country, the tech giants operate in nearly all countries of the world. Who would nationalize these companies? If their home country – the United States of America – would nationalize these companies, the US government would control data of millions – if not billions – of people abroad. This situation would hardly be acceptable to any other government. One solution to this could be the United Nations, as it is the most widely accepted international, diplomatic institution. The UN represents a body where all governments have a vote and can influence the decision as to how to treat the data.

 

Furthermore, it remains questionable as to how those companies should be nationalised. Should the government buy a majority of the shares? Who would provide the money for that? How would Facebook look, if it was controlled by the state? Would this prohibit innovation, and would the government be a better or worse protector for our private data?

What questions do you see as important and what aspects do you think support or oppose this idea?

 

 

 

Bibliography:

Daserste, (2020), Jan Böhmermann ist zurück, Available at: https://www.daserste.de/information/wissen-kultur/ttt/sendung/sendung-vom-13092020-104.html (Accessed: 2020).

 

Zhu, F., Iansiti, M., (2019), Why some platforms thrive and others don’t, Available at: https://hbr.org/2019/01/why-some-platforms-thrive-and-others-dont (Accessed: 2020).

 

Shapiro, C. and Varian, H. R. (1999) Information rules: a strategic guide to the network economy. Boston, Mass.: Harvard Business School Press. Available at: https://www.researchgate.net/publication/200167344_Information_Rules_A_Strategic_Guide_to_The_Network_Economy (Accessed: 2020).

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