Experiments on Self-Nudging, Autonomy, and the Prospect of Behavioral-Self-Management

Abstract

Strategies based in behavioral economics have quickly gained major importance in shaping public policy, most notably in the form of nudges that promise to promote, but not to force, socially-productive choices at low cost. Nudging interventions typically presume some asymmetry of sophistication and power between the choice architect and the nudged. But the nudged need not be relegated to a passive role. We present evidence that individuals have the capacity to overcome their biases, and even to use them to their advantage. This capacity for Behavioral-Self-Management (BSM) can allow them to self-nudge and to act as the choice architects of their future-self. In our study we provide workers with the autonomy to choose among a variety of loss-framed and gain-framed contracts to perform a real effort task. The results show that subjects can harness their own loss aversion as a commitment device to significantly improve their performance. The contract gives individuals the authority to self-nudge. This autonomy to choose adds to the effectiveness of their BSM strategy. We show that subjects experience self-determination utility seperate from performance benefits driven by better adjustment of work tasks to subjects’ production functions. To demonstrate the policy relevance of our results we expand on an application to retirement savings-plans, which we suggest may lift savings rates at no additional cost.