The hidden costs of nudging: Experimental evidence from reminders in fundraising

Christina Gravert and Mette Trier Damgaard

Natural Field Experiments from The Field Experiments Website

Abstract: We document the hidden costs of one of the most policy-relevant nudges, reminders. Sending reminders, while proven effective in facilitating behavior change, may come at a cost for both senders and receivers. Using a large scale field experiment with a charity, we find that reminders increase donations, but they also substantially increase unsubscriptions from the mailing list. To understand this novel finding, we develop a dynamic model of donation and unsubscription behavior with limited attention which is tested in reduced-form using a second field experiment. We also estimate our model structurally to perform a welfare analysis. We show that when not accounting for the hidden costs of reminders the average welfare effects for donors are overstated by a factor of ten and depending on the discount factor the welfare effects of the charity may be negative. Our results show the need to evaluate nudges on their intended as well as unintended consequences.

Date: 2016
New Economics Papers: this item is included in nep-cbe and nep-exp
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2018)
Working Paper: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2016)
Working Paper: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:natura:00549

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