More than a wink and a nudge: examining the choice architecture of online government budget simulations

Abstract Following the growing interest in using behavioral theory and choice architecture in the public sector, several new studies have looked at how changes in the choice architecture of budget simulations influence the participants’ budgetary decisions. These studies have also introduced the possible problem that participants may make inappropriate choices in the budget simulation, like creating a budget with unacceptably high budget surpluses. Building on Thaler and Sunstein’s NUDGES framework, we seek to answer the question, ‘How can budgetary choice architects correct for errors such as large ending surpluses at the end of the budget simulation?’ We replicate earlier results on budget starting conditions. Additionally, we test a budget treatment that encourages participants to reduce ending budget surpluses. The budget treatment works as intended and suggests that the large ending budget surpluses stem from errors made by participants in the simulation rather than loss aversion. The need to both nudge and budge participants is important for practicing choice architects, like public budgeters who have to design and implement tools that inform citizens and reveal accurate preferences that conform with legal requirements.