Deposit Contracts with Performance-Based Refund as a Commitment Device: A Field Experiment

Last registered on May 16, 2022

Pre-Trial

Trial Information

General Information

Title
Deposit Contracts with Performance-Based Refund as a Commitment Device: A Field Experiment
RCT ID
AEARCTR-0009431
Initial registration date
May 12, 2022

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
May 16, 2022, 5:18 PM EDT

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

Locations

Region

Primary Investigator

Affiliation
University of Vechta

Other Primary Investigator(s)

PI Affiliation
University of Vechta

Additional Trial Information

Status
In development
Start date
2022-05-15
End date
2022-09-30
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
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.
External Link(s)

Registration Citation

Citation
Hiller, Maximilian and Vanessa Mertins. 2022. "Deposit Contracts with Performance-Based Refund as a Commitment Device: A Field Experiment." AEA RCT Registry. May 16. https://doi.org/10.1257/rct.9431
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Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-05-15
Intervention End Date
2022-09-01

Primary Outcomes

Primary Outcomes (end points)
take-up rate, successful goal achievements and (average) degree of target achievement
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Average costs per treatment, average cost per individual (especially important in comparison to the control and bonus treatments).
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We focus on a setting where the participants want to increase physical activity by reaching an individual calculated step goal. The goal is calculated based on baseline phase. At time of running the baseline e, participants are not aware that we assign them a goal and how it will be determined. After the baseline, the participants learn about the goal. Afterwards, all participants are randomized into the following treatments:

a) T0 Control Group
b) T1 Reward
c) T3 Standard Deposit Contract
e) T3 Deposit Contract with Performance-Based Refund

Participants in T0 Control are simply told that they will get a participation fee (20 Euro) at the end of the study, regardless of how often and to what extent they actively tried and actually have achieved their goal. In T1 Bonus, we offer participants a reward: participants will receive the same information as in the T0 Control but gain an additional bonus (0.25 Euro) for each day on which they have reached or exceeded their individual goal (max. 20 Euro additional) after an opt-in. In T3 Standard Deposit Contract participants are offered to opt-in in a deposit contract where they could earn additional money (0.25 Euro; max. 20 Euro additional) for each day they achieve or exceed their goal and lose money (2.00 Euro) if they fail. T3 Deposit Contract with Performance-Based Refund needs a 2 Euro front-loaded deposit if accepted. Participants receive a performance-based deposit refund (1:1) and an additional bonus for each day on which they have reached or exceeded their individual goal (0.25 Euro; max. 20 Euro additional).
Experimental Design Details
Not available
Randomization Method
Randomization into the four groups done by a computerized random draw.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
100 individuals
Sample size: planned number of observations
100 individuals
Sample size (or number of clusters) by treatment arms
a) T0 Control group: 25 Individuals
b) T1 Treatment 1: 25 Individuals
c) T2 Treatment 2: 25 Individuals
d) T3 Treatment 3: 25 Individuals
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
German Association for Experimental Economic Research e.V.
IRB Approval Date
2022-05-12
IRB Approval Number
AtdrRwpH