Working Paper: CEPR ID: DP13299
Authors: Thomas Mariotti; Nikolaus Schweizer; Nora Szech; Jonas von Wangenheim
Abstract: We study the optimal design of information nudges for present-biased consumers who have to make sequential consumption decisions without exact prior knowledge of their long-term consequences. For arbitrary distributions of risk, there exists a consumer-optimal information nudge that is of cutoff type, recommending consumption or abstinence according to the magnitude of the risk. Under a stronger bias for the present, the target group receiving a credible signal to abstain must be tightened. We compare this nudge with those favored by a health authority or a lobbyist. When some consumers are more strongly present-biased than others, a traffic-light nudge is optimal.
Keywords: information design; information nudges; present-biased preferences; self-control
JEL Codes: C73; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| information nudges (D80) | consumption decisions (D12) |
| consumer-optimal information nudge (D83) | consumption decisions (D12) |
| present bias (D15) | effectiveness of information nudges (D91) |
| risk perception (D81) | effectiveness of information nudges (D91) |
| information structure (L15) | consumption choices (D10) |
| credibility of the nudge (D91) | harmful consumption (I12) |
| optimal information structure (D83) | effectiveness of the nudge (D91) |