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Interventions and Cognitive Spillovers
[The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons]

Author

Listed:
  • Steffen Altmann
  • Andreas Grunewald
  • Jonas Radbruch

Abstract

This article investigates how incentives and behavioural policy interventions affect individuals’ allocation of scarce cognitive resources. Based on experimental evidence, we demonstrate that incentives systematically influence individuals’ allocation of cognitive resources, and their propensity to actively engage with a decision or to stay passive. Policies that steer individuals’ attention to a specific decision lead to more active decision-making and better choices in the targeted choice domain, but induce negative cognitive spillovers on the quality of choices in other domains. In our setting, these two countervailing effects offset each other, such that the overall payoff consequences of the interventions are essentially zero. We further document that cognitive spillovers are especially pronounced for complex choices and for subgroups of the population with a smaller stock of cognitive resources. We discuss implications for the design and evaluation of behavioural policy interventions.

Suggested Citation

  • Steffen Altmann & Andreas Grunewald & Jonas Radbruch, 2022. "Interventions and Cognitive Spillovers [The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(5), pages 2293-2328.
    • Handle: RePEc:oup:restud:v:89:y:2022:i:5:p:2293-2328.
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    File URL: http://hdl.handle.net/10.1093/restud/rdab087
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    Citations

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    Cited by:

    1. Koch, Alexander K. & Monster, Dan & Nafziger, Julia, 2023. "Nudging in Complex Environments," IZA Discussion Papers 16137, Institute of Labor Economics (IZA).
    2. Bachler, Sebastian & Erhart, Andrea & Holzknecht, Armando, 2023. "Replication Report on Altmann et al. (2022)," I4R Discussion Paper Series 43, The Institute for Replication (I4R).
    3. Bonev, Petyo, 2023. "Behavioral Spillovers," Economics Working Paper Series 2303, University of St. Gallen, School of Economics and Political Science.
    4. L’Esperance, Madelaine, 2023. "Nudging credit union members to check their credit: Evidence from a field experiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).

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