Abstract
The pure attempt to achieve health related goals is already positive behavior, which, however, is rarely rewarded economically. Commitment devices and motivational tools such as deposit contracts, whose effectiveness has been empirically proven, often only reward successes.
The performance evaluation and pay are dichotomous: Success across the board is rewarded with a bonus, while every failure, no matter how small, carries a penalty. Therefore, acceptance rates tend to be low. But only individuals who accept them benefit from those contracts. To tackle this issue, we designed a deposit contract with a performance-based refund. To tackle these issues, we implement an additional feature in deposit contracts. Individuals can decide every day whether they would like to opt-in in a deposit contract but in addition to a standard deposit contract, where people lose money if they fail and get an additional reward if they reach the predefined goal, we implement a piece rate for performance-based deposit refunds. For every percent of goal achievement, the participants take forward to full (100%) goal achievement, they receive one percent deposit refund. For example, if a participant with a daily goal of reaching 10.000 steps performs 9.000 steps, he receives a refund of 90% of the previous made deposits. Still, a reward is only paid when the goal is reached (100%). With this procedure participants are not penalized disproportionally but also not rewarded, if they do not manage to achieve 100% goal achievement. We empirically test this device in a field experiment (randomized controlled trial) with individuals who want to achieve a health goal.