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Seminar

The Habit-Forming Effects of Feedback: Evidence from a Large-Scale Field Experiment


  • Series
  • Speaker
    Lorenz Goette (National University of Singapore)
  • Field
    Behavioral Economics
  • Location
    University of Amsterdam, Roeterseilandcampus, room E0.22
    Amsterdam
  • Date and time

    June 08, 2023
    16:00 - 17:15

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Abstract

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.