Review of Behavioral Economics > Vol 5 > Issue 3-4

Choice Architecture in Consumer Financial Decisions

Min Zhao, Boston College, USA and University of Toronto, Canada,
Suggested Citation
Min Zhao (2018), "Choice Architecture in Consumer Financial Decisions", Review of Behavioral Economics: Vol. 5: No. 3-4, pp 417-437.

Publication Date: 31 Dec 2018
© 2018 M. Zhao
Behavioral Economics
Nudgefinancial decisionsintention-action gapmindsetbehavioral decision makingconsumer behavior


Open Access

This is published under the terms of CC-BY.

In this article:
1. Key Premises in Behavioral Economics 
2. From Financial Goals to Financial Actions 
3. Increasing Physical Height to Increase Construal Level and Long-term Goal Achievement 
4. The Implementation Mindset 
5. Irrelevant Environmental Cues Create a Virtual Boundary and Increase Commitment 
6. Goal Singularity Prompts Implementation Mindset and Increases Saving 
7. Conclusion 


Outstanding U.S. consumer credit totalled $3.84 trillion, emphasizing the fact that helping consumers effectively manage their personal finances has never been more important. Among the three pillars of financial well-being, this paper addresses the last pillar related to behavioral facilitation, given that one of the biggest challenges most consumers face is their inability to convert their best intentions into actual behavior. Specifically, this paper reviews and discusses various behavioral interventions in choice architecture designed to facilitate healthy financial behavior. These include enhancing physical height to increase level of thinking and long-term focus, incorporating incidental cues to form virtual boundaries and evoke implementation mindset, and using verbal/visual presentation of multi-faceted financial goals to emphasize goal singularity and increase implementation. Findings across such studies contribute to recent research on financial decision-making and choice architecture, and they provide readily applicable strategies for policy makers to “nudge” consumers toward more responsible financial decisions.



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