To improve efficiency and reduce costs, government agencies provide more and more services online. Yet, sometimes people do not access these new services. For example, prior to our field experiment intervention, Ontario spent $35 million annually on infrastructure needed for in-person license plate sticker renewals. In Canada’s most populous province, only 10% of renewals occurred online. Our intervention tested variations in messaging mailed with sticker renewal forms that encouraged consumers to renew online. We changed text and color on the envelope to try to make the benefits of the online service more salient. In addition, changes to text and color on the renewal form itself emphasized either consumer gains from online renewals or losses associated with in-person renewals. Each intervention increased use of the online service when compared to the unaltered messaging. The combination of salience and gain framing achieved the highest number of online renewals: a 41.7% relative increase.
My co-authors Kristina Shampanier, Dan Ariely, and I, we just published a new research article in Management Science (March 2, 2016) on the attraction of lottery-type of price promotions.
Abstract: A number of retailers offer gambling- or lottery-type price promotions with a chance to receive one’s entire purchase for free. Although these retailers seem to share the intuition that probabilistic free price promotions are attractive to consumers, it is unclear how they compare to traditional sure price promotions of equal expected monetary value. We compared these two risky and sure price promotions for planned purchases across six experiments in the field and in the laboratory. Together, we found that consumers are not only more likely to purchase a product promoted with a probabilistic free discount over the same product promoted with a sure discount but that they are also likely to purchase more of it. This preference seems to be primarily due to a diminishing sensitivity to the prices. In addition, we find that the zero price effect, transaction cost, and novelty considerations are likely not implicated.
In a large scale randomized control trial with a credit card company, my coauthor Dan Ariely and I successfully used behavioral insights in the company’s interactive voice recording (IVR) messages to significantly decrease delinquency. A win-win outcome for both customers and the company.
Default options significantly influence individuals’ tendencies to comply with public policy goals such as organ donation. My co-author Scott Hawkins and I extend that notion and explore the role defaults can play in encouraging (im)moral conduct. Our findings support a more nuanced perspective on the implication of the different types of costs associated with default options and offer practical insights for policy, such as taxation, to nudge honesty.