Repairing a Cracked Mirror: The Heterogeneous Effect of Personalized Digital Nudges Driven by Misperception

Miyeon Jung, Daegon Cho and Euncheol Shin

Production and Operations Management, 2021, vol. 30, issue 8, 2586-2607

Abstract: Our study aims to deepen the understanding of personalized digital nudges by evaluating their effects on energy‐saving behavior. We conducted a field experiment with a leading smart metering company in South Korea to investigate whether customers save more energy when a personalized goal and feedback are provided, and how the impacts of nudges vary according to the types of misperception. Specifically, we focused on the behavior of customers who underestimate or overestimate their past electricity usage compared to their actual consumption. We merged daily energy consumption with a pre‐experiment survey for the customers. We found that goal‐setting and feedback mechanisms have a markedly different impact on each type of misperception. Underestimating customers reduced energy consumption only under the “goal‐setting with feedback" treatment. Conversely, overestimating customers reduced energy consumption even under the “goal‐setting without feedback" condition. The underlying mechanism is suggested as updating biased beliefs toward goal achievement. Overall, the results demonstrate that personalized nudges lead to heterogeneous behavioral responses and that service providers and policymakers can use these signals to enrich their planning of behavioral nudges.

Date: 2021
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