Definition 1

The two defining characteristics of a sludge (Thaler, 2018) are “friction and bad intentions” (Goldhill, 2019). While Richard Thaler strongly advocates nudging for good by making desirable behavior easier, a sludge does the opposite: It makes a process more difficult in order to arrive at an outcome that is not in the best interest of the sludged. Examples of sludges include product rebates that require difficult procedures, subscription cancellations that can only be done with a phone call, and complicated or long government student aid application forms.

Even when a sludge is associated with a beneficial behavior (as in student aid, voter registrations or driver’s licenses, for example), costs can be excessive. These costs may be a difficulty in acquiring information, unnecessary amounts of time spent, or psychological detriments, such as frustration (Sunstein, 2020).

Source: Behavioral Economics

Definition 2