On the contrarywe often choose immediate rewards over higher future benefits. We take the path of least resistance, typically by going with the status quo or simply doing nothing.

Seduced to Act

Take saving for retirement. We all know it's important, yet studies show that many of us haven't done a good job of it. Enter behavioral economics. One of its most successful applications has been to get workers to participate in retirement savings plans. For decades, employers cajoled workerseven offering generous matching contributionsto sign up for the 401(k). But human inertia often won out, and many workers didn't join.

Then employerswith a green light from Uncle Samstarted to automatically enroll workers in the plan; some even gradually increased employees' contributions over time. Workers can opt out, of course.

But inertia, now working in favor of savings, stops them from doing so. Vanguard, an investment firm that administers 401(k) plans for employers, found that when companies auto-enroll workers, the participation rates among new hires more than double, to about 90 percent.

The good news is that a growing number of employers, companies and nonprofits are using behavioral insights in similar ways to influence choices to make people better off. Here are six examples.

Making investment decisions easier

Too many 401(k) investment choices can overwhelm, causing workers to put off making any decision.

And even when they do select investments, human inertia often causes them never to revisit their choices. Over time, their portfolios can end up being heavily weighted in riskier stocks, putting their nest egg in jeopardy.

The solution: target-date retirement funds. Workers need to select only a single fund with the date closest to their retirement, and a professional money manager does the restinvesting aggressively when workers are younger and gradually becoming more conservative as they near retirement. Target-date funds are usually the default option when employers automatically enroll workers in 401(k)s and now are found in 9 out of 10 workplace plans, according to Aon Hewitt, a benefit consulting firm.

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Behavioral science can trick you into doing the right thing - AARP News