Engagement Dynamics in mHealth

Abstract

This study investigates user engagement dynamics in mHealth with data from a food and exercise tracking mobile application. We first uncover differences in engagement dynamics between basic and premium users. This analysis reveals that premium users are more diligent at tracking food and exercise calories in the short-run, but these engagement differences between premium and basic users dampen significantly over time. These empirical patterns suggest the possibility of sunk costs and hedonic decline. Motivated by these patterns, we evaluate the extent to which sunk costs can explain the observed user engagement dynamics. A calibrated model of user engagement illustrates that the inferred dynamics are consistent with the mechanism of sunk costs. An implication of this finding is that user engagement as well as the attractiveness of premium version adoption, could increase if fees are raised; with sunk costs, higher fees can induce greater usage and thus utility from premium adoption.

Keywords: Behavioral Analytics; Freemium; Mobile Health; Subscriptions; Sunk Costs

JEL Classification: I12; M3