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Nudging Debtors to Pay their Debt: A Randomized Control Trial

Last registered on November 12, 2019
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Pre-Trial

Trial Information

General Information

Title
Nudging Debtors to Pay their Debt: A Randomized Control Trial
RCT ID
AEARCTR-0005023
Initial registration date
November 12, 2019

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
November 12, 2019, 11:25 AM EST

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

Locations

Country
Sweden
Region

Primary Investigator

Name
Felix Holzmeister
Affiliation
University of Innsbruck, Department of Banking and Finance
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Other Primary Investigator(s)

PI Name
Michael Kirchler
PI Affiliation
University of Innsbruck, Department of Banking and Finance
Contact Investigator
PI Name
Jürgen Huber
PI Affiliation
University of Innsbruck, Department of Banking and Finance
Contact Investigator

Additional Trial Information

Status
In development
Start date
2019-11-18
End date
2020-11-18
Keywords
Finance & Microfinance
Additional Keywords
JEL code(s)
Secondary IDs
Abstract
We will conduct a randomized control trial with a partnered debt collection agency in Europe, with the goal to ``nudge'' debtors to pay their debts and/or to contact the agency to arrange a personalized payment plan. In total, the debt collection agency will distribute 35,000 hard-copy letters to debtors who currently owe money to the agency, calling on them to settle their debt.
External Link(s)

Registration Citation

Citation
Holzmeister, Felix, Jürgen Huber and Michael Kirchler. 2019. "Nudging Debtors to Pay their Debt: A Randomized Control Trial." AEA RCT Registry. November 12. https://doi.org/10.1257/rct.5023-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2019-11-18
Intervention End Date
2019-11-20

Primary Outcomes

Primary Outcomes (end points)
(i) debtors' responses to the mailing
(ii) debtors' repayments
Primary Outcomes (explanation)
(i) debtors' responses to the mailing based on any of the communication means offered in the letter, i.e., phone calls, e-mails, and hard-copy letters, within four weeks starting from the day of the outgoing mail (i.e., until December 14, 15, or 16, depending on whether the particular letter was sent on November 18, 19, or 20);
(ii) debtors' payments within four weeks starting from the day after the outgoing mail (i.e., December 15, 16, or 17, depending on whether the particular letter was sent on November 18, 19, or 20), as the letter will be received the day after it has been forwarded at the earliest.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We will implement five different conditions with varying envelope designs that are intended and assumed to attract the recipients' attention: (i) a control treatment with a blank envelope only containing the company logo in the top left corner (which is equivalent as the envelope design the company has used up to now), (ii) a colored envelope with a stamp saying ``Important! Open me'', (iii) a colored envelope with a word cloud emphasizing that the letter contains ``important information,'' translated into ten languages that are most spoken by the debt collection agency's customers, (iv) a colored envelope with playfully illustrated birds to attract attention, and (v) a colored envelope with congenial, friendly-looking eyes, illustrated as if they would watch the recipient from the inside of the letter.

In this randomized control trial, only the envelope designs will be varied while the letter itself will be held constant across all conditions. The letter, which is a simplified version of the company's previous standard letter, reads: ``We want to help you to be free of your debts. You do currently have one or more cases with us with unpaid debts. On ``My Page'' you find a breakdown of your debts that today amounts to [amount]. You find ``My Page'' on [url]. Below you see information about how you can pay and contact us.'' In addition, the letter contains an overview about the different payment options and the note that ``[if] you do not have the possibility to pay your debt, contact us so that we can review your case and find a solution that works for you.''
Experimental Design Details
Randomization Method
randomization done in office by a computer
Randomization Unit
individual-level randomization
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
five treatment groups of debtors
Sample size: planned number of observations
35,000 debtors
Sample size (or number of clusters) by treatment arms
7,000 debtors per treatment condition
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Board for Ethical Questions in Science of the University of Innsbruck
IRB Approval Date
2019-11-11
IRB Approval Number
60/2019
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials