Daniel Navarro-Martinez

Minimum Required Payment and Supplemental Information Disclosure Effects on Consumer Debt Repayment Decisions

Repayment decisions—how much of the loan to repay and when to make the payments—directly influence consumer debt levels. The authors examine how minimum required payment policy and loan information disclosed to consumers influence repayment decisions. They find that while presenting minimum required payment information has a negative impact on repayment decisions, increasing the minimum required level has a positive effect on repayment for most consumers. Experimental evidence from U.S. consumers shows that consumers’ propensity to pay the minimum required each month moderates these effects; U.K. credit card field data indicate that borrowers’ credit limit and balance due also moderate these effects. However, increasing the minimum level is unlikely to completely eliminate the negative effect of presenting minimum payment information. In addition, disclosing supplemental information, such as future interest cost and time needed to repay the loan, does not reduce the negative effects of including minimum payment information and has no substantial positive effect on repayments. This research offers new insights into the debt repayment process and has implications for consumers, lenders, and public policy.

Paying people to eat or not to eat? Carryover effects of monetary incentives on eating behaviour

There is no evidence comparing head-to-head the effects of monetary incentives to act and to abstain from acting on behaviour. We present an experiment, conducted between June and September 2012, that directly compares the effects of those two different monetary incentive schemes on eating behaviour: we evaluate incentives to eat against incentives not to eat. A large number of participants (n = 353) had bowls of sweets next to them while they watched different videos over two experimental sessions that were two days apart. Sweets eating was monitored and monetary incentives to eat or not to eat were introduced during one of the videos for participants randomly allocated to these conditions. Our results show that, while both types of incentives were effective in changing sweets-eating behaviour when they were in place, only incentives not to eat had significant carryover effects after they were removed. Those effects were still significant two days after the monetary incentives had been eliminated. We also present some additional results on personality and health-related variables that shed further light on these effects. Overall, our study shows that incentives not to eat can be more effective in producing carryover effects on behaviour in domains like the one explored here.

On the Measurement of Strength of Preference in Units of Money

We report an experimental study that aims to elicit monetary measures of strength of preference in choices involving pairs of risky prospects. Despite extensive testing to refine the instruments used, we find that these money measures are systematically biased upwards relative to subsequent binary choices. We discuss possible reasons for this bias and its broader implications.

On the External Validity of Social Preference Games: A Systematic Lab-Field Study

We present a lab-field experiment designed to assess systematically the external validity of social preferences elicited in a variety of experimental games. We do this by comparing behavior in the different games with a number of behaviors elicited in the field and with self-reported behaviors exhibited in the past, using the same sample of participants. Our results show that the experimental social-preference games do a poor job in explaining both social behaviors in the field and social behaviors from the past.