A Practitioner’s Guide to Nudging

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Gym-Pact: Using Motivational Fees As a Commitment Device for Exercising Getting more exercise is a New Year’s resolution that many people make but fail to follow through with. One reason, according to Yifan Zhang, cofounder of Gym-Pact, has to do with gym memberships. 13 Gym memberships are usually paid at the beginning of the year. Once that step has been taken, the money is spent (sunk), and missing a gym session does not hurt the individual financially any more than it would to attend. Zhang and Geoff Oberhofer developed Gym-Pact to counteract this problem by using what they call “motivational fees.” Participants set a target number of gym visits each week and pay a penalty fee when they miss a session. In Gym-Pact’s trial phase, Zhang and Oberhofer purchased memberships on behalf of the participants. Participants did not pay for their membership but committed to exercising four times a week. If they failed to follow through, the participants would have to pay $25. If participants left the program, they would have to pay $75. Gym-Pact has become a full-fledged business, and while the business model has been adapted slightly, it still uses the concept of motivational fees. Specifically, participants still pay a penalty for missing their commitments, but the penalties are now distributed back to those participants who manage to follow through, as a small reward. The program is quite FIGURE 7 USING PAIN-OF-PAYING TO ENCOURAGE GYM ATTENDANCE Mindful Mindless Encourage Discourage Encourage Discourage Boosting self-control Externally imposed Activating a desired behaviour Selfimposed Externally imposed X PAGE 16 NUDGING: CASE STUDIES FILENE RESEARCH INSTITUTE
successful; in its first five months, participants have followed through with their commitments 90% of the time. 14 Gym-Pact has been featured in the press and has expanded its business to help individuals track workouts not just at the gym but also at home and outdoors. 15 Self-Help and Peer Pressure As a Savings Commitment Device A group of researchers studied the effects of peer pressure and self-help groups on savings behaviour and found that they were effective at helping individuals save money. 16 The experiments were conducted in Chile with low-income microentrepreneurs who earned an average of 84,188 pesos (US$175) per month. Sixty-eight percent of participants did not have a savings account prior to the study and were required to sign up for an account based on the savings group they were assigned to: → Savings group 1—A basic savings account with an interest rate of 0.3%. → → Savings group 2—A basic savings account with an interest rate of 0.3%. The participants were also part of a self-help peer group, where they could voluntarily announce their savings goals and monitor their progress on a weekly basis. Savings group 3—A high-interest-rate account with a rate of 5% (the best available rate in Chile). FIGURE 8 USING PEER PRESSURE TO INCREASE SAVINGS COMMITMENT Mindful Mindless Encourage Discourage Encourage Discourage Boosting self-control Activating a desired behaviour Externally imposed Externally imposed Selfimposed X X PAGE 17 NUDGING: CASE STUDIES FILENE RESEARCH INSTITUTE
Page 1 and 2: REPORT A Practitioner’s Guide to
Page 3 and 4: Table of Contents 4 EXECUTIVE SUMMA
Page 5 and 6: practitioners can use to reevaluate
Page 7 and 8: A Practitioner’s Guide to Nudging
Page 9 and 10: In this report, we use the term “
Page 11 and 12: These four dimensions combined resu
Page 13 and 14: The results showed that the high-tu
Page 15: A Planning Aid to Increase Savings
Page 19 and 20: used, the Waterpebble automatically
Page 21 and 22: Select the Nudge Bottlenecks in the
Page 23 and 24: Identify the Levers for Nudging Ide
Page 25 and 26: possible, we recommend that it be a
Page 27 and 28: FIGURE 14 MINDSPACE FRAMEWORK Messe
Page 29 and 30: APPENDIX 2 Decision Map Checklist P
Page 31 and 32: Block FAFSA Experiment, National Bu
Page 33 and 34: 22 FIGURE 13 BEHAVIOURAL INFLUENCES
Page 35 and 36: Dilip Soman Rotman School of Busine

A Practitioner’s Guide to Nudging

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