The Habit Forming Effects of Feedback: Evidence from a Large-Scale Field Experiment

68 Pages Posted: 20 Dec 2021 Last revised: 22 Nov 2022

See all articles by David P. Byrne

David P. Byrne

University of Melbourne

Lorenz Goette

University of Bonn

Leslie A. Martin

University of Melbourne - Department of Economics

Amy Miles

affiliation not provided to SSRN

Alana Jones

affiliation not provided to SSRN

Samuel Schob

University of Bamberg

Thorsten Staake

University of Bamberg

Verena Tiefenbeck

ETH Zürich

Date Written: November 22, 2022

Abstract

We document the dynamics of persistence using a large-scale field experiment that provides cost salience nudges with different cycles of duration. Households respond asymmetrically: behavior quickly adjusts to these nudges and sluggishly readjusts without them. We then develop a habit formation model that nests traditional consumption-based mechanisms and an attention-based mechanism that allows for dynamic responses to time-varying salience. Combining our field experiment and structural model, we validate the importance of attention dynamics and uncover a new solution concept for optimizing feedback interventions to create sustained behavioral change.

Keywords: Habit formation; Attention; Salience-enhancing feedback; Water usage; Randomized Control Trial; Structural Estimation

JEL Classification: C52, C93, D83, D91, L95, Q25

Suggested Citation

Byrne, David P. and Goette, Lorenz and Martin, Leslie A. and Miles, Amy and Jones, Alana and Schob, Samuel and Staake, Thorsten and Tiefenbeck, Verena, The Habit Forming Effects of Feedback: Evidence from a Large-Scale Field Experiment (November 22, 2022). Available at SSRN: https://ssrn.com/abstract=3974371 or http://dx.doi.org/10.2139/ssrn.3974371

David P. Byrne (Contact Author)

University of Melbourne ( email )

Level 4
111 Barry Street
Melbourne, Victoria 3010
Australia

HOME PAGE: http://sites.google.com/view/dprbyrne/

Lorenz Goette

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Leslie A. Martin

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

HOME PAGE: http://lesliemartin.org

Amy Miles

affiliation not provided to SSRN

Alana Jones

affiliation not provided to SSRN

Samuel Schob

University of Bamberg ( email )

Thorsten Staake

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg, 96045
Germany

Verena Tiefenbeck

ETH Zürich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

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