Sophisticated Consumers with Inertia: Long-Term Implications from a Large-Scale Field Experiment

Last registered on April 26, 2023
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Pre-Trial

Trial Information

General Information

Title
Sophisticated Consumers with Inertia: Long-Term Implications from a Large-Scale Field Experiment
RCT ID
AEARCTR-0011311
Initial registration date
April 20, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
April 26, 2023, 5:00 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region

Primary Investigator

Name
Avner Strulov-Shlain
Affiliation
University of Chicago
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Other Primary Investigator(s)

PI Name
Navdeep Sahni
PI Affiliation
Stanford University
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PI Name
Klaus Miller
PI Affiliation
HEC Paris
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Additional Trial Information

Status
Completed
Start date
2018-04-01
End date
2020-04-23
Keywords
Behavior, Firms & Productivity
Additional Keywords
Inertia, Consumer sophistication, Inattention, Switching costs, Subscriptions, Long-run effects
JEL code(s)
D12, D90, D22, L20, L81, L82, M31
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
Abstract
Are inert consumers aware of their future inertia? To answer this we run a field experiment that offers two million readers of a European newspaper auto-renewing or auto-canceling contracts. We find consumers are inert yet anticipate and account for their inertia: offering auto-renewing contracts lowers subscriptions by 24% and reduces subscribers by 10% over two years; most of the inert readers preempt inertia. Consumers' inertia impact on market outcomes depends on consumers’ overall awareness of it, which is often ignored by the literature, firms, and policy makers. In our context, consumer sophistication limits the firm from exploiting their behavioral limitations.
External Link(s)

Registration Citation

Citation
Miller, Klaus, Navdeep Sahni and Avner Strulov-Shlain. 2023. "Sophisticated Consumers with Inertia: Long-Term Implications from a Large-Scale Field Experiment." AEA RCT Registry. April 26. https://doi.org/10.1257/rct.11311-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2018-04-01
Intervention End Date
2018-08-31

Primary Outcomes

Primary Outcomes (end points)
Subscriptions to newspaper's contracts, including experimentally offered promotions and all other products sold by the publisher.
Browsing behavior on website from two weeks before being exposed to the experiment until 4 weeks after.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Our experiment simultaneously varies three factors of the subscription offer. Each factor has two levels leading to a 2x2x2 experimental design.

* Subscription Renewal after the Promo: The first factor is the subscription renewal after the end of the promotional trial, which is either auto-renewal or auto-cancellation. A reader who takes an auto-renewal promo contract becomes a regular paid subscriber after the trial period is over, by default, unless the reader explicitly terminates the subscription. On the other hand, a reader who takes an auto-cancel offer does not become a paid subscriber by default. Instead, the reader can actively choose to resume the subscription access the next time she hits the paywall, through a pop-up on the platform's home page, or by clicking on a link in any one of several emails the platform sends the reader with an aim of reinstating the subscription.\footnote{Approximately 5 days before the end of the trial offer, an email with a renewal prompt is sent to the reader, and a restart of the subscription can be initiated with a click on this email. If a reader does not respond to this email, she will be targeted in several follow-up emails as part of the standard process.} In each of these methods, the reader verifies her already entered payment information and confirms the subscription contract.
* Duration: The second factor is the duration of the experimental offer, which is either two weeks or four weeks.
* Promotional Price: The third factor is price for the promo period, which is either \euro{0.99} or \euro{0}. The price after the experimental offer is identical across individuals, and so is the set of contracts they can choose from.
Experimental Design Details
Randomization Method
Randomization by a random number generator at the cookie level once a reader hits the publisher's paywall.
Randomization Unit
Individual device (identified by a cookie)
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
No clusters.
Sample size: planned number of observations
2.1M
Sample size (or number of clusters) by treatment arms
Roughly 260,000 readers per every one of 8 treatment arms
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
August 31, 2018, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
April 23, 2020, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
2.1M readers/devices
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
2.1M readers/devices
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
Are inert consumers aware of their future inertia? To answer this we run a field experiment that offers two million readers of a European newspaper auto-renewing or auto-canceling contracts. We find consumers are inert yet anticipate and account for their inertia: offering auto-renewing contracts lowers subscriptions by 24\% and reduces subscribers by 10\% over two years; most of the inert readers preempt inertia. Consumers' inertia impact on market outcomes depends on consumers’ overall awareness of it, which is often ignored by the literature, firms, and policy makers. In our context, consumer sophistication limits the firm from exploiting their behavioral limitations.
Citation
Miller, Klaus, Navdeep S. Sahni, and Avner Strulov-Shlain. 2022. “Sophisticated Consumers with Inertia: Long-Term Implications from a Large-Scale Field Experiment.” SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4065098.
URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4065098

Reports & Other Materials