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Naivete, projection bias, and habit formation in gym attendance

  • Dan Acland
  • Matthew Levy
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    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/
    File Function: Open access version.
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    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
    Contact details of provider: Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.
    Phone: +44 (020) 7405 7686
    Web page: http://www.lse.ac.uk/

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    1. 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.
    2. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2001. "Projection Bias in Predicting Future Utility," General Economics and Teaching 0012003, EconWPA.
    3. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
    4. Charness, Gary B & Gneezy, Uri, 2008. "Incentives to Exercise," University of California at Santa Barbara, Economics Working Paper Series qt3tc3j5x7, Department of Economics, UC Santa Barbara.
    5. S. Nageeb Ali, 2009. "Learning Self-Control," Levine's Working Paper Archive 814577000000000384, David K. Levine.
    6. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    7. 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.
    8. 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.
    9. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-72, June.
    10. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    11. Roland Bénabou & Jean Tirole, 2002. "Self-Confidence And Personal Motivation," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 871-915, August.
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