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

Mette Trier Damgaard and Christina Gravert
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Mette Trier Damgaard: Aarhus University

No 650, Working Papers in Economics from University of Gothenburg, Department of Economics

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, showing that reminders are welfare diminishing for the potential donors as non-givers incur a welfare loss of $2.35 for every reminder. The net benefit of every reminder to the charity is $0.18. Our evaluation shows the need to evaluate nudges on their intended as well as unintended consequences.

Keywords: Avoiding-the-ask; charitable giving; field experiment; inattention; nudge; reminders. (search for similar items in EconPapers)
JEL-codes: C93 D03 D64 H41 (search for similar items in EconPapers)
Date: 2016-03
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http://hdl.handle.net/2077/42370 (text/html)

Related works:
Journal Article: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2018) Downloads
Working Paper: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2016) Downloads
Working Paper: The hidden costs of nudging: Experimental evidence from reminders in fundraising (2016) Downloads
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