Nudging debtors to pay their debt: Two randomized controlled trials

Abstract: We conducted two large-scale, highly powered randomized controlled trials intended to encourage consumer debt repayments. In Study 1, we implemented five treatments vary- ing the design of envelopes sent to debtors. We did not find any treatment effects on re- sponse 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. The results of this study contrast with the findings of other studies, which indicate that comparable nudges are highly effective. Thus, our results are more consistent with the literature suggesting that the success of nudging interventions is limited to certain conditions.

Recommended citation: Holzmeister, F., Huber, J., Kirchler, M., Schwaiger, R. (2022). Nudging debtors to pay their debt: Two randomized controlled trials. Journal of Economic Behavior and Organization, 198, 535-551.
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