Behavioral nudges may work on organizations, study finds

Behavioral interventions are already used to nudge individuals to act on their motivations, like respond to an email or file their taxes. An organization can be nudged similarly, according to a study published in Management Science.

The study, published in November 2020, focused on more than 6,000 organizations that failed to file their annual payroll tax return in Ontario. Researchers tweaked the standard late-filing notice sent to delinquent account holders in the 2013 and 2014 tax years. The companies were randomly selected to either receive the standard late-filing letter, which asked recipients to pay immediately, or the modified letter, which gave explicit step-by-step instructions of how to file a return and had a deadline for filing.

Companies that received the modified letter were more likely to file returns four to five days sooner. Researchers reported similar results during both waves of the study.

In a column published Feb. 22 in Harvard Business Review, the study's authors said that organizations face competitive pressures that lead them to incentivize profit maximization and adopt technology or other tools to support organizational decision-making. 

However, factors like groupthink, polarization and diffusion of responsibility can hinder group decision-making, and individual nudges may not resolve broader issues when organizations go off course, the researchers said.

"What we have learned is that the foibles that can cause individuals to fail to follow through on their best intentions can persist despite the advantages of organization, and that in some instances the same tools can be applied to successfully overcome these foibles," they concluded.

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