The Importance of Opting in and Opting Out

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Gerd: I want to ask you about a different use, which is nudging and sometimes called libertarian paternalism. You give a number of examples in the book of how people behave very differently when they have to opt in versus opt out. Government's not coercing you, but the government should choose the options that are best," he says. "We need to invest in making people stronger"

Psychologist and author Gerd Gigerenzer of the Max Planck Institute for Human Development talks about his book Gut Feelings with EconTalk host Russ Roberts. Gigerenzer argues for the power of simple heuristics--rules of thumb--over more complex models when making real-world decisions. He argues that many results in behavioral economics that appear irrational can be understood as sensible ways of coping with complexity.