Sludge and transaction costs
Shahab and Lades examine the relationship between sludge, as behavioural scientists use the term, and transaction costs as understood in economics. Both literatures use an analogy to friction, and the paper asks whether they are using it differently, and if not, whether sludge is needed as a concept at all given the established transaction-cost tradition. Their conclusion is that sludge and transaction costs are related but distinct concepts. This publication carries the distinction in the form most useful to a reader: a transaction cost is a cost of doing business, while sludge is a cost somebody chose to add to a process and could remove tomorrow.
Shahab and Lades examine the relationship between sludge, as behavioural scientists use the term, and transaction costs as understood in economics. Both literatures use an analogy to friction, and the paper asks whether they are using it differently, and if not, whether sludge is needed as a concept at all given the established transaction-cost tradition. Their conclusion is that sludge and transaction costs are related but distinct concepts. This publication carries the distinction in the form most useful to a reader: a transaction cost is a cost of doing business, while sludge is a cost somebody chose to add to a process and could remove tomorrow.
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What our sources record
Reproduced as it was written when this source was checked, figures and all.
Behavioural Public Policy. Sludge and transaction costs are related but distinct concepts. doi:10.1017/bpp.2021.12
Where we use it
- Count the Steps In, Then the Steps Out, Why We Come Back
Reliability of this reference
The link below was matched against the publisher's record on title, first author and year, and all three agree.
The source
https://doi.org/10.1017/bpp.2021.12
DOI: 10.1017/bpp.2021.12