In many economies, households pay for essential goods such as electricity or water after consumption has taken place. With present-biased consumers, such delayed-billing schemes cause overconsumption of the respective good. We build on the literature of commitment devices to test whether self-set energy savings goals reduce electricity consumption.
In cooperation with a large German utility provider, we implement a field experiment in which we offer randomly chosen participants the possibility to set energy savings goals using a new function in a widely used mobile application. Following the theoretical contributions in the literature, we hypothesize that these endogenously chosen goals create references points and allow consumers to exert discipline over the consumption of future selves.
In addition, we test two different versions of our goal-setting intervention that are motivated by predictions from a theoretical model. In our final experimental period, we compare our goal setting treatments with a financial incentive to conserve energy.