Everyone believes in redemption: Nudges and overoptimism in costly task completion

Joshua Tasoff and Robert Letzler

Journal of Economic Behavior & Organization, 2014, vol. 107, issue PA, 107-122

Abstract: We elicit subjects’ beliefs about the likelihood that they will redeem a mail-in form. Expected redemption rates exceed actual redemption rates by 49 percentage points, meaning that subjects are overoptimistic about their likelihood of redemption. We test the impact of three “nudges” on overoptimism: (1) informing subjects about a previous cohort's redemption rates, (2) reminding subjects about the redemption deadline, and (3) reducing transaction costs. The first two treatments reduced overoptimism by 7 and 8 percentage points respectively, but these effects were not significant. Only the third nudge had a significant effect and it reduced overoptimism by 26 percentage points. All three nudges increased redemption but had no statistically significant effect on beliefs. Our results suggest that weak cost-salience is an important mechanism for overoptimism.

Keywords: Overoptimism; Overconfidence; Nudges; Rebates; Weak cost-salience (search for similar items in EconPapers)
JEL-codes: D12 D14 D18 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:107:y:2014:i:pa:p:107-122

DOI: 10.1016/j.jebo.2014.08.011

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