Nudging Debtors to Pay Their Debt: Two Randomized Controlled Trials

47 Pages Posted: 7 Dec 2021

See all articles by Juergen Huber

Juergen Huber

University of Innsbruck

Felix Holzmeister

University of Innsbruck - Department of Economics

Michael Kirchler

University of Innsbruck

Rene Schwaiger

University of Innsbruck - Department of Banking and Finance

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Abstract

We conducted two large-scale, highly powered randomized controlled trials intended to encourage consumer debt repayments. In Study 1, we implemented five treatments varying the design of envelopes sent to debtors. We did not find any treatment effects on response and repayment rates compared to the control condition. In Study 2, we varied the letters’ contents in nine treatments, implementing factorial combinations of social norm and (non-)deterrence nudges, which were either framed emotively or non-emotively. We find that all nudges are ineffective compared to the control condition and even tend to induce backfiring effects compared to the agency’s original letter. Since comparable nudges have been shown to be highly effective in other studies, our study supports the literature, emphasizing that the success of nudging interventions crucially depends on the domain of application.

Keywords: Nudging, randomized controlled trial, debt repayment

Suggested Citation

Huber, Juergen and Holzmeister, Felix and Kirchler, Michael and Schwaiger, Rene, Nudging Debtors to Pay Their Debt: Two Randomized Controlled Trials. Available at SSRN: https://ssrn.com/abstract=3979642 or http://dx.doi.org/10.2139/ssrn.3979642

Juergen Huber (Contact Author)

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Felix Holzmeister

University of Innsbruck - Department of Economics ( email )

Universitaetsstrasse 15
Innsbruck, 6020
Austria

HOME PAGE: http://www.holzmeister.biz

Michael Kirchler

University of Innsbruck ( email )

Innsbruck
Austria

Rene Schwaiger

University of Innsbruck - Department of Banking and Finance ( email )

Universitätsstraße 15
Innsbruck, 6020
Austria

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