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Naivete, projection bias, and habit formation in gym attendance

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  • Dan Acland
  • Matthew Levy
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    Abstract

    We develop a model capturing habit formation, projection bias, and present bias in an intertemporal-choice setting, and conduct a field experiment to identify its main parameters. We elicit subjects' pre- and post-treatment predictions of post-treatment gym attendance, using a habit-formation intervention based on Charness and Gneezy (2009) as an exogenous shock to treated subjects' gym preferences. Projection-biased subjects, projecting their current habit state onto their future expectations, will, ex-ante, under-estimate any habit-formation effect of our treatment. Naive present-biased subjects in both groups will overestimate their future attendance. Like Charness and Gneezy, we find subjects do form a significant short-run habit, though we find substantial decay caused by the semester break. Subjects appear not to embed this habit formation into their ex-ante predictions. Approximately one-third of subjects formed a habit equivalent to the effect of a $2.60 per-visit subsidy, while their predictions correspond to 90% projection bias over this habit formation. Moreover, subjects greatly over-predict future attendance, which we interpret as evidence of partial naivete with respect to present bias: they appear to expect their future selves to be two-thirds less "present biased" than they currently are.

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    File URL: http://eprints.lse.ac.uk/46827/
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    Bibliographic Info

    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 46827.

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    Length: 53 pages
    Date of creation: 10 Mar 2013
    Date of revision:
    Handle: RePEc:ehl:lserod:46827

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    1. Stefano DellaVigna, 2007. "Psychology and Economics: Evidence from the Field," NBER Working Papers 13420, National Bureau of Economic Research, Inc.
    2. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    3. Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Gary Charness & Uri Gneezy, 2009. "Incentives to Exercise," Econometrica, Econometric Society, vol. 77(3), pages 909-931, 05.
    5. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias In Predicting Future Utility," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1209-1248, November.
    6. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
    7. Roland BĂ©nabou & Jean Tirole, 2002. "Self-Confidence And Personal Motivation," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 871-915, August.
    8. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    9. Read, Daniel & van Leeuwen, Barbara, 1998. "Predicting Hunger: The Effects of Appetite and Delay on Choice, , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 189-205, November.
    10. Michael Conlin & Ted O'Donoghue & Timothy J. Vogelsang, 2007. "Projection Bias in Catalog Orders," American Economic Review, American Economic Association, vol. 97(4), pages 1217-1249, September.
    11. S. Nageeb Ali, 2009. "Learning Self-Control," Levine's Working Paper Archive 814577000000000384, David K. Levine.
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