Ruhr Economic Papers

Ruhr Economic Papers #881

You Can Win by Losing! Using Self-Betting as a Commitment Device: Evidence from a Weight Loss Program

by Linda Hirt-Schierbaum and Maryna Ivets

RGS, TUD, UDE, 11/2020, 69 S./p., 10 Euro, ISBN 978-3-96973-020-1 DOI: 10.4419/96973020

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Abstract

In this paper we investigate the influence of financial incentives on agents’ commitment success who use a self-bet mechanism to overcome their self-control problems. We use results from the theoretical model developed in Hirt-Schierbaum and Ivets (2020) that allows for heuristic bias in agents’ expectations of their future self-control costs and future payoffs, and test its conclusions with data from the online weight loss program DietBet. Our empirical results suggest that financial incentives incorporated into the self-bet mechanism encourage commitment and weight loss. More specifically, by placing higher wagers on themselves and participating in games with larger pots, agents can increase their chances of successful commitment and lose more weight. Additionally, we explore heterogeneity of the results by agents’ type based on how accurately they predict their future self-control costs and future payoffs.

JEL-Classification: C93, D01, D84, D90

Keywords: Weight loss; financial incentive; self-bet; commitment device; self-control; heuristic bias; overconfidence; underconfidence; optimism; pessimism

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