The Habit-Forming Effects of Feedback: Evidence from a Large-Scale Field Experiment
SpeakerLorenz Goette (National University of Singapore)
LocationUniversity of Amsterdam, Roeterseilandcampus, room E0.22
Date and time
June 08, 2023
16:00 - 17:15
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We document the dynamics of persistence using a large-scale field experiment that provides cost salience nudges with different cycles of duration. Households respond asymmetrically: behavior quickly adjusts to these nudges and sluggishly readjusts without them. We then develop a habit formation model that nests traditional consumption-based mechanisms and an attention-based mechanism that allows for dynamic responses to time-varying salience. Combining our field experiment and structural model, we validate the importance of attention dynamics and uncover a new solution concept for optimizing feedback interventions to create sustained behavioral change.