Sludge and transaction costs

Shahab, Sina ORCID: https://orcid.org/0000-0003-3788-2564 and Lades, Leonhard K. 2024. Sludge and transaction costs. Behavioural Public Policy 8 (2) , pp. 327-348. 10.1017/bpp.2021.12

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Abstract

Behavioral scientists have begun to research ‘sludge,’ excessive frictions that make it harder for people to do what they want to do. Friction is also an important concept in transaction-cost economics. Nevertheless, sludge has been discussed without explicit referral to transaction costs. Several questions arise from this observation. Is the analogy to friction used differently in both literatures? If so, what are the key differences? If not, should we develop the concept of sludge when the well-established literature on transaction costs already exists? This conceptual article shows that sludge and transaction costs are related, but distinct, concepts, and that the literature on sludge can benefit from incorporating elements from transaction-cost research. For example, we suggest defining sludge as aspects of the choice architecture that lead to the experience of costs, organize sludges using a typology inspired by the transaction-cost literature, highlight specificity, uncertainty, and frequency as important determinants of the ‘sludginess’ of choice architecture, and show that sludge audits can be conducted using methods developed in the transaction-cost literature.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Geography and Planning (GEOPL)
Publisher:	Cambridge University Press
ISSN:	2398-063X
Date of First Compliant Deposit:	15 March 2021
Date of Acceptance:	10 March 2021
Last Modified:	16 Apr 2024 11:09
URI:	https://orca.cardiff.ac.uk/id/eprint/139803

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