Nudging: The Influence On Own Choice

19

October

2017

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Digitization of society is not a new thing. The rise of the internet and the Internet of Things changed the basis of competition and have become an inherent part of our lives. You may think, this is something I already know. But what if I tell you that digitization of society may influence your behavior and choices? What if the technologies that we use are a way for firms and governments to indirectly steer us in certain directions by persuading and influencing our choices. This practice is called ‘Nudging’ and can be defined as the influencing of behavior without coercion with the influencers as choice architects (Thaler & Sunstein, 2008).

Let me first explain how nudging works; by providing an obvious design choice, behavior is influenced by shaping the situations of decision-making in such a way that the individual will take the ‘right’ decision with a higher probability than in an alternative landscape (Kemmerer et al., 2016). For example, the government in America designs situations where the default option is to donate organs or save more for retirement (Tapson, 2013).

Particularly, Thaler & Sunstein emphasize that nudges should be used when decisions are difficult or hard to understand and should help to make the ‘right’ choice (Thaler & Sunstein, 2008). However, more and more firms use nudging in a matter that in no way is likely to help the user. Firms desperately attempt to nudge users towards conversations like newsletter signups and add manipulative text to their popup models (NN Group, 2017). As you can see on the image of this blog, texts used in the popup have the intention to make the user feel bad if they are not interested in an offer. Visible is that the accepting link is often bigger, brighter and more visible than the rejection link. Moreover, the rejection link is often a variety of undesirable statements and specifically focuses on the fear of missing out.

But this is just one example. Facebook, for example, is also an persuader that has learned how your brain works and knows now how to make you click on more links (by attracting your attention), and may influence the number of times and amount of time spend on certain pages. Though behavioral design could be innocent, more and more big companies use nudging in ways to control their consumers and get more power over their consumers.

My question to you: are we in need to set rules that diminish large companies nudging powers to protect our free choice? And if so, how should that be done?

Kemmerer, A., Möllers, C., Steinbeis, M., & Wagner, G. (2016). Choice Architecture in Democracies: Exploring the Legitimacy of Nudging-Preface.

NN Group. (2017, April 30th). Stop Shaming Your Users For Micro Conservations. Accessed on: 18-10-2017. Retrieved from https://www.nngroup.com/articles/shaming-users/

Tapson, M. (2013, August 13th). The Soft Totalitarianism of Nudging. Accessed on: 15-10-2017. Retrieved from http://www.frontpagemag.com/fpm/200533/soft-totalitarianism-nudging-mark-tapson

Thaler, R.H., Sunstein, C.R., 2008, Nudge – Improving decisions about Health, Wealth, and Happiness, London: Yale University Press

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Data Driven Prosecution – Government How Far Can You Go?

2

October

2017

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Nowadays, an important feature of smartphones is that you can download third-party applications. These applications have made mobile devices much more fun and useful and increased the convenience to users [1]. These smartphone applications collect a lot of information about the user and its activities, making not only commercial companies but also governments or parties like Dutch Tax Authorities interested in obtaining the data. However, what if the data is not used to improve the customer experience of a user but to identify a person’s lies about travel expenses or double accounting?

In the end of 2013, it became publicly known that the Dutch tax authorities had demanded data access of at least three companies that enabled users to park-and-pay via an smartphone application. This was done to check the places, the amount of time and the date users of the application had parked their car. Specifically, the tax authorities wanted to check whether leasing authors kept themselves at the permitted private kilometers rates, but could also use the data for other purposes. Though many users and the companies such as SMSParking thought it was against the right of privacy and filed a lawsuit, the Dutch Supreme Court ruled (on August 2014) that tax officers may use the data. [2][3]

Last year, the Dutch Tax Authorities attempted to gain access and use “Automaic Number Plate Recognition” data obtained from the national policy, in order to verify private use of lease-cars. Controversy, this time the Dutch Supreme Court ruled (on February 2017) that it was unlawful infringement of the right of privacy [4].

As the examples show, the Dutch Tax Authorities – and the government in general – would like to use the data generated by these smartphone applications and are willing to go to court for it. Nevertheless, there are two sides to this coin. On the one hand, the digitalization of – for example – parking provides an additional source of information for the governments in maintaining the law. On the other hand, it puts companies in a difficult position with its loyal customers, who become loyal in part because they assume the company protects the data it receives from them. Moreover, people can perceive it as `big brother watching you´.

Indeed, the Internet of Things is really going to be the Internet of Everything. And that’s why I think it will be fascinating to see the public discourse that forms around future lawsuits like those mentioned above. If the Internet is everywhere and everything, how far can a government go to find out information about you?

[1] Enck, W., Gilbert, P., Han, S., Tendulkar, V., Chun, B.-G., Cox, L. P., Jung, J., McDaniel, P., and Sheth, A. N. 2014. TaintDroid: An information-flow tracking system for realtime privacy monitoring on smartphones. ACM Trans. Comput. Syst. 32, 2, Article 5 (June 2014), 29 pages. DOI:http://dx.doi.org/10.1145/2619091

[2] https://www.nrc.nl/nieuws/2013/11/08/fiscus-wil-parkeerinfo-sms-parking-weigert-a1429970

[3] https://decorrespondent.nl/2743/belastingdienst-stopt-met-opvragen-parkeergegevens/84363708-41ee02e8

[4] https://www.loyensloeff.com/nl-nl/news-events/newsletters/privacy-newsletter/data-protection-and-privacy-update-the-netherlands-february-2017

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Technology Of The Week – The Disruption Of The Music Industry – (Group 51)

29

September

2017

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As a consequence of continuous innovation, the dynamics of the music industry have significantly changed between the 20th and 21th century. In 1963, the advent of the cassette, made music an information good – since it derives its value from the information it contains.

Using the framework of Porter’s five forces, the threat of new entrants and substitute products have significantly increased due to the rise of the internet. The industry has become less capital intensive and other media opportunities can claim the attention of music customers. Also, bargaining power of consumers and rivalry among competitors is nowadays very high. Customers have a highly varied demand and can choose from which supplier they want their music, while many competitors are competing for the same market share. Lastly, bargaining power of suppliers has gone from very powerful to relatively low power as a result of internet distribution. This changed the music market, from customers buying an album from a store or borrowing from a friend, to sharing your music through the worldwide web and particularly peer-to-peer file sharing.

However, there are multiple problems the music industry is facing. Specifically, it is challenging to protect music online. The online file sharing of copyrighted material has led to many problems with copyright infringement, costing creative content creators up to billions of dollars every year. Alternatives, respecting intellectual property rights of music and video, have developed rapidly in the recent years. Customers pay a fixed amount each month, giving them unlimited access to a complete music library. Still however, using a popular soundtrack in a video outside this environment, could already land you in trouble if posted on Youtube. If for example you attend the wedding of a friend and make a video of the event with Robbie Williams playing in the background, you theoretically lose the rights of this video, and any profits resulting from it. For your wedding video this won’t be a big problem, but when you rely on your Youtube videos to provide your income, it can be very difficult.

The characteristics of information goods have profound implications for competition strategies. For the music industry, these implications mostly affect the channels or media formats through which music is sold. We foresee three major channels of music sales in the future: The first are concerts, which follow a differentiation strategy. The second are streaming applications, which we expect to almost completely wipe out regular CD or even online MP3 sales. Their ability to compete on cost and convenience allows them to outcompete piracy. We also expect a few dominant players to arise, since the music streaming market benefits from network effects: A greater library of music attracts customers. Lastly, a niche market will continue to exist for high-quality conceptual albums that offer something beyond the ability to simply listen to the music. Think of the intangible pleasure of owning a vinyl, or adding merchandise or other exclusive content as part of the bundle.

The video can be viewed, using the following link:
https://www.youtube.com/watch?v=yK_rGcnm4j4

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