Published 3/18/26
The Unholy City
Part II
IV. The Nudge Factory
The next stop on our tour of the City is the Nudge Factory. Here, the City creates nudges, those little prompts that offer opportunities and suggestions to continue engagement—a link, a button, an illustration, a video title, a clip, an advertisement—a small, carefully designed prompt that steers a choice without appearing to coerce it, just so that the subject will continue. When it works, the Algorithm notes the kind of enticement that has succeeded in the subject’s profile, and given another opportunity, it will offer a similar enticement.
The Nudge Factory is dispersed: each application on the Internet has its own set of nudges, an architecture of choices and engagement suited to its purposes and needs. It is everywhere, built into buttons, pop-ups, countdown timers, and “recommended for you” lists. But they all partake of behavioral psychology, learned from millions of man-hours of marketing and the innovations brought by programmers and system architects.
A choice architecture implemented in a car dealership or a grocery may be applied to a few hundreds or thousands of customers each year, tipping a small percentage of them to purchase decisions they might not otherwise reach. A corresponding choice architecture in an online “store” is presented to millions (and maybe far more than that), with results that may be far greater because the customer is “captured”. Unbeknownst to the customer, the choice architecture exploits information from the customer’s electronic twin: demographics (so far as they are known and relevant), history, and responsiveness to suggestion.
To place the significance of the Nudge Factory in perspective, we need to be aware of the incentive structure. The Click-Through Rate (CTR) measures the rate at which the subjects click on “Learn More”, or the like, in response to ads. It indicates interest, and as such, the Algorithm applies this valuable information to the subject’s electronic profile. This fraction is typically measured as a few tenths of one percent relative to the total number of ad exposures. The so-called ConVersion Rate (CVR) is the rate at which exposures to ads result in a sale or subscription, presented as a fraction of the CTR. Again, these are tiny fractions, a few tenths of one percent, but because they are spread over so enormous a population, the rewards are very great. An improvement in decision structure across the board of just one tenth of one percent in the CVR can mean an increase of hundreds of millions of dollars or more in ad income. Of course, such a measure would not usually involve just one technique but a whole family of techniques. The immensity of the reward justifies the hiring of hundreds of psychologists and statisticians to develop such techniques.
As a result, all the familiar techniques—bait & switch, hidden costs, misdirection, shaming, the variations on abuse of “free trials”, advertisements disguised as entertainment—are employed with great and increasing sophistication. There are a few new ones, like eliciting personal information while one is fighting through confusing privacy settings or concealing the penalty for monthly subscription by calling it “savings” when attached to the corresponding annual subscription. Before the time of electronic commerce, any of these techniques would have been publicly disparaged by consumer watchdogs. Today, they are implemented so universally online that meaningful opposition or even criticism is difficult. Besides, criticism of the City can easily be suppressed by the City’s Algorithm.
The subject’s choices not only condition the electronic twin but condition the subject, as well. Each time the subject goes down a certain path of interaction, it becomes easier to choose a similar path again. The implications of this conditioning with time are vast. The City’s curated responses are highly individualized, but the same architecture is scaled up to be shown to hundreds of millions every day. It hides choices the City finds undesirable, ensuring they are almost never encountered. The City’s manipulation of the choice environment is literally everywhere, ubiquitous, in every interaction. Within the Internet, there is no escape, from social media to shopping to obtaining services. And because the City has people’s frequent attention for hours each day, over the course of years their attention is captured, and the model of their behavior is increasingly refined by the Algorithm.
The ethics of nudges and all the other barely-conscious and unconscious online appeals and traps have been debated in academic and industry circles, in journals and conferences. But in practice, the incentive structure is overwhelmingly powerful, because there is one thing worse than a dubious ethical reputation, and that is a bad quarterly report. We all know which of those choices usually prevails.
Dead flies cause the oil of the perfumer to send forth an evil odor; so doth a little folly outweigh wisdom and honor.—Ecclesiastes 10:1 (ASV)
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