Using AI and Behavioral Finance to Cope with Limited Attention and Reduce Overdraft Fees

45 Pages Posted: 18 Jul 2019 Last revised: 11 Jan 2025

See all articles by Daniel Ben-David

Daniel Ben-David

Hebrew University of Jerusalem - Department of Finance

Ido Mintz

Intuit

Orly Sade

Hebrew University of Jerusalem - Department of Finance

Date Written: February 11, 2024

Abstract

We test how effective a human-algorithm interaction is at stopping users from overdrawing their bank accounts. We use a randomized field experiment and draw our sample from users of a large personal financial management platform operating in the United States and Canada. We find that sending as-needed reminders is effective in and of itself, and the impact is intensified by the human response to the structure of the message. More simple messages are more effective, and the framing of the simplified message makes a difference. Users with medium to high annual incomes and users with fair to good credit scores are most likely to respond positively. We find that the investigated AI solution reduces information-gathering costs and has a positive effect but is not sufficient in all cases. Those with challenging financial situations may find it harder to act upon the warning. For our analysis we employ parametric identifications and time-to-event semi-parametric analysis. Our work contributes to the literature on financial technology as advisors, human-computer interaction, limited attention, behavioral finance, and experimental finance.

Keywords: artificial intelligence, behavioral finance, overdraft, limited attention, ostrich, Human algo interaction

Suggested Citation

Ben-David, Daniel and Mintz, Ido and Sade, Orly, Using AI and Behavioral Finance to Cope with Limited Attention and Reduce Overdraft Fees (February 11, 2024). Available at SSRN: https://ssrn.com/abstract=3422198 or http://dx.doi.org/10.2139/ssrn.3422198

Daniel Ben-David

Hebrew University of Jerusalem - Department of Finance ( email )

Israel

Ido Mintz

Intuit ( email )

7535 Torrey Santa Fe Road
San Diego, CA, CA 94043
United States

HOME PAGE: http://linkedin.com/in/idomintz

Orly Sade (Contact Author)

Hebrew University of Jerusalem - Department of Finance ( email )

Mount Scopus
Jerusalem, 91905
Israel
972 2 588 3227 (Phone)

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