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Thursday, November 23, 2017

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DR@W Forum
Wolfson 1, Library

Christina Gravert (Gothenburg)

Title :  â€˜Hidden Costs’

Abstract: We document the hidden costs of a popular nudge and show how these costs distort policy making when neglected. In a field experiment with a charity, we find reminders increasing intended behavior (donations), but also increasing avoidance behavior (unsubscriptions from the mailing list). We develop a dynamic model of donation and unsubscription behavior with limited attention. We test the model in a second field experiment which also provides evidence that the hidden costs are anticipated. The model is estimated structurally to perform a welfare analysis. Not accounting for hidden costs overstates the welfare effects for donors by factor ten and hides potential

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Library, Wolfson 1

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