Information Nudges and Self-Control

Thomas Mariotti (), Nikolaus Schweizer (), Nora Szech and Jonas von Wangenheim ()
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Thomas Mariotti: Toulouse School of Economics, Centre National de la Recherche Scientifique, University of Toulouse Capitole, Toulouse 31042, France; Centre for Economic Policy Research, London EC1V 0DX, United Kingdom; Center for Economic Studies, Munich 81679, Germany
Nikolaus Schweizer: Department of Econometrics and Operations Research, Tilburg University, 5037 AB Tilburg, Netherlands
Jonas von Wangenheim: Institute for Microeconomics, University of Bonn, Bonn 53113, Germany

Management Science, 2023, vol. 69, issue 4, 2182-2197

Abstract: We study the optimal design of information nudges directed to present-biased consumers who make consumption decisions over time without exact prior knowledge of their long-term consequences. For any distribution of risks, there exists a consumer-optimal information nudge that is of cutoff type, recommending abstinence if the risk is high enough. Depending on the distribution of risks, more or fewer consumers have to be sacrificed, as they cannot be credibly warned even though they would like to be. Under a stronger present bias, the target group receiving a credible warning to abstain must be tightened, but this need not increase the probability of harmful consumption. If some consumers have a stronger present bias than others, traffic-light nudges turn out to be optimal and, when subgroups of consumers differ sufficiently, the optimal traffic-light nudge is also subgroup optimal. We finally compare the consumer-optimal nudge with those that a health authority or a lobbyist would favor.

Keywords: nudges; present bias; self-control; information design (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:4:p:2182-2197

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