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How Good is AI at Twisting Arms? Experiments in Debt Collection

Author

Listed:
  • James J. Choi
  • Dong Huang
  • Zhishu Yang
  • Qi Zhang

Abstract

How good is AI at persuading humans to perform costly actions? We study calls made to get delinquent consumer borrowers to repay. Regression discontinuity and a randomized experiment reveal that AI is substantially less effective than human callers. Replacing AI with humans six days into delinquency closes much of the gap. But borrowers initially contacted by AI have repaid 1% less of the initial late payment one year later and are more likely to miss subsequent payments than borrowers who were always called by humans. AI’s lesser ability to extract promises that feel binding may contribute to the performance gap.

Suggested Citation

  • James J. Choi & Dong Huang & Zhishu Yang & Qi Zhang, 2025. "How Good is AI at Twisting Arms? Experiments in Debt Collection," NBER Working Papers 33669, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33669
    Note: CF LS PR
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G4 - Financial Economics - - Behavioral Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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