Crowdsourcing Peer Information to Change Spending Behavior
70 Pages Posted: 22 Feb 2019 Last revised: 2 Jun 2020
Date Written: May 2020
Consumers might overestimate optimal spending if forming beliefs based on others' spending, because others' conspicuous consumption is more visible than the rest of their consumption. If true, information about others' overall spending should change beliefs and choice. For a test, we provide crowdsourced information about anonymous “peer groups" to users of a FinTech app. Users converge to peers, especially when peer groups are more informative. For identification, we compare similar users matched to different peers based on sharp thresholds. A randomized control trial on a non-selected population supports external validity. Our results inform the design of robo-advisors for spending.
Keywords: FinTech, Learning, Beliefs and Expectations, Robo-advising, Visibility Bias, Social Transmission, Information Economics, Household Finance.
JEL Classification: D12, D14, D91, E22, G41
Suggested Citation: Suggested Citation