Working Paper: NBER ID: w27443
Authors: Erin T. Bronchetti; Judd B. Kessler; Ellen B. Magenheim; Dmitry Taubinsky; Eric Zwick
Abstract: This paper investigates whether people optimally value tools that reduce attention costs. We call these tools bandwidth enhancements (BEs) and characterize how demand for BEs varies with the pecuniary incentives to be attentive, under the null hypothesis of correct perceptions and optimal choice. We examine if the optimality conditions are satisfied in three experiments. The first is a field experiment (n = 1373) with an online education platform, in which we randomize incentives to complete course modules and incentives to utilize a plan-making tool to complete the modules. In the second experiment (n = 2306), participants must complete a survey in the future. We randomize survey-completion incentives and how long participants must wait to complete the survey, and we elicit willingness to pay for reminders. The third experiment (n = 1465) involves a psychometric task in which participants must identify whether there are more correct or incorrect mathematical equations in an image. We vary incentives for accuracy, elicit willingness to pay to reduce task difficulty, and examine the impact of learning and feedback. In all experiments, demand for reducing attention costs increases as incentives for accurate task completion increase. However, in all experiments—and across all conditions—our tests imply that this increase in demand is too small relative to the null of correct perceptions. These results suggest that people may be uncertain or systematically biased about their attention cost functions, and that experience and feedback do not necessarily eliminate bias.
Keywords: Attention Costs; Bandwidth Enhancements; Cognitive Economics
JEL Codes: C91; C93; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| incentives for accurate task completion (J33) | demand for reducing attention costs (D12) |
| plan-making tool usage (O21) | likelihood of completing coding lessons (C89) |
| completion incentives (M52) | plan-making tool usage (O21) |
| size of bonus for survey completion (J33) | willingness to pay for reminder emails (M31) |
| willingness to pay for reminder emails (M31) | undervaluation of reminders (D46) |
| WTP to decrease task difficulty (F16) | undervaluation of task difficulty reductions (D29) |