Platforms as choice architects

The choices we face online may appear straightforward: swipe left, swipe right. But these behaviours are shaped by complex frameworks, designed to enable and influence our decision-making.

Joost Rietveld, Professor, UCL School of Management, Adam Cohen, Director of Economic Policy at Google, Tobias Kretschmer, Professor at University of Munich and Stefan Hunt, Senior Director at The Competition and Market Authority (CMA), debated on the topic of platforms as choice architects at the Platform Leaders event on the 24th of November 2021.

“We increasingly make decisions with the help of platforms: we search for information on Google, we explore romantic partners on Tinder, we consume entertainment on our smartphones,” says Joost Rietveld, Professor at the UCL School of Management. 

Design choices nudge our behaviour

The decisions that we make are defined by the choices that are available to us. “Platforms both present us with options and help us decide on whatever option is the right choice for us,” explains Joost. “Choice architecture is the design of different ways in which choices can be presented to consumers, and the impact of that presentation on consumer decision-making.”

Choice architecture influences decision-making in key ways, Joost points out, such as:
• the number of options,
• the description and presentation of choices, or
• setting options as defaults.

In practice, this could look like:
• the order of search engine results,
• the type of posts that an algorithm or a platform editor promotes, or
• default privacy settings.

Joost adds: “Platforms nudge our behaviour through their various design choices. These nudges clearly aren’t neutral, and they are likely driven by a multitude of incentives.” Platforms wield significant influence and have to contend with the needs of different interest groups.

This creates tension in choice architecture. “On the one hand, a thoughtful design of choice architecture can improve consumer decision-making by minimising biases,” says Joost. “On the other hand, what is right for the consumer may not always be optimal for the platform – and vice versa.”

Content platforms like Facebook have long grappled with this tension. “When Facebook implemented a change in its content-promoting algorithm to foster meaningful social interactions, it resulted in stronger engagement rates, thus benefiting the platform,” Joost says. “But it also led to a decline in mental wellbeing among users, as the algorithm promoted content that was perceived as divisive and negative by users.”

 

How Google deals with choice architecture

Much of the burden of responsibility for choice architecture falls on practitioners. Google’s Director of Economic Policy, Adam Cohen, is transparent about how his organisation approaches this challenge.

“It’s essential to build a good product that people want to use and that they find useful,” he says. “I come back to an early motto of [Google’s] which was, ‘Focus on the user and the rest will follow.’”

“We’re thinking about that trade-off between friction and relevance,” Adam further reflects. “Where you have forced choices that aren’t very relevant, it is a turnoff to the user; where you have forced choices that are helpful, it increases value.”

 

Google rigorously tests everything they design, considering several key questions:
• What are the frequency of choices we’ll be presenting?
• What type of UI does that entail?
• How accessible and understandable is it going to be to the user?
• How important is this choice going to be?
• What are the costs and the benefits of any moments of friction?

There are also general principles that Google uses to think about effective user choice:
1. Any friction should be necessary and helpful. It should increase the welfare of the user and the potential of the ecosystem.
2. Choices should be understandable. They should provide information without being overwhelming or deceptive.
3. Choices should be context-specific. They should be presented at moments when they are relevant.

Ultimately, Adam thinks, “it’s about presenting smart choices and making sure that consumers are informed of those choices.”

 

Nudging or curating? Platforms take multiple approaches

For Tobias Kretschmer, Professor at the University of Munich, platforms require an even more nuanced understanding of choice architecture than other business models.

“The point of many [platforms] is to connect different sides,” he says. “The way that platforms present choices on one side will affect the options that are available on the other side.”

Tobias explains further: “If we think of the platform as […] an ecosystem in which a thousand flowers bloom – in which we basically have an ecosystem of free joining, leaving, and inventing complementers – then the overall value proposition that the ecosystem provides is not fixed by the platform.”

Many platforms use choice architecture to influence the value proposition that they offer. Tobias sees two distinct approaches:
1. Curating/controlling approach, for example, Apple’s approval policy for apps or Amazon’s vetting process.
2. Nudging/rewards-based approach, for example, Facebook’s soft incentives for developers in the early days of the platform.

Meanwhile, YouTube is an example of a hybrid approach. They reward successful creators by allowing them to monetise their content, but strictly control the minimum number of subscribers that a creator needs to attract before being able to monetise.

“There isn’t any one right solution for every kind of platform, or even for the same platform at different points in time,” says Tobias. YouTube’s hard and soft rules for inclusion into the monetisation scheme is an example of a possible miscalculation, Tobias thinks. “That may well have cut out a number of potentially very interesting and very lucrative content creators from YouTube, who then went on to Patreon and basically strengthened a competing platform.”

 

The complexity of measuring what’s good for users

“I guess my first point is that platforms as choice architects often do really fantastic jobs,” says Stefan Hunt, Senior Director at the UK’s Competitions and Markets Authority. Still, consumer welfare is multidimensional and oversight is often needed to protect users’ interests.

Stefan’s recent work at the CMA includes investigations into digital advertising on Facebook and Google, mobile ecosystems like Apple and Google, and fair competition on hotel booking and car hire platforms.

“What we are concerned about is potentially harmful online choice architecture,” Stefan says. He shares examples of how choice architecture can go wrong:
• It can distort consumers’ decision-making.
      e.g. false scarcity claims, reference pricing, and non-disclosed paid search ranking.
• It can help firms strengthen their market position, by keeping rivals out.
      e.g. default search positions or pre-installed applications.
• It can help firms exploit their market power.
      e.g. the framing of questions around data collection.

According to Stefan, the question then arises: “To the extent that the platforms have choice architecture that we might care about, what can we do?” He sees two clear mechanisms:
1. Changes in regulation
2. Technical capabilities within consumer protection agencies, e.g. behavioural analysts

All that said, agencies like the CMA want to work with platforms like Google, not against them. “We can help nudge businesses in the right direction over time,” Stefan believes.

 

Collaborating on responsible choice architecture

Adam agrees that collaboration and cooperation between regulators and companies like Google should be welcomed. The dynamics of consumer protection and business innovation that we see in so many aspects of platforms are also intrinsic to their choice architecture.

With online choices having such meaningful effects in daily life, the stakes for platform participants are high. Joost observes, it’s about the “balance between presenting choice and avoiding choice overload.” The task of helping to strike that balance belongs not only to practitioners, but to policymakers and researchers, too.

 

To go further 

 

This panel with Joost Rietveld,  Adam Cohen, Tobias Kretschmer and Stefan Hunt was part of the Platform Leaders event organised by Launchworks & Co on the 24th of November 2021 (full list of speakers and agenda). To watch the full event, play the video below.