nep-mkt New Economics Papers
on Marketing
Issue of 2022‒08‒15
two papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Nudge to be Green? The Influence of Social Comparison on Consumers' Consumption Behaviors: A Case Study of Green Takeaway Packaging By Han, Fei; Zhou, Jiehong; Yan, Zhen; Yin, Shijiu
  2. Do nudges increase consumer search and switching? Evidence from financial markets By Zita Vasas

  1. By: Han, Fei; Zhou, Jiehong; Yan, Zhen; Yin, Shijiu
    Keywords: Institutional and Behavioral Economics, Research Methods/Statistical Methods, Marketing
    Date: 2022–08
  2. By: Zita Vasas (Centre for Competition Policy and Norwich Business School, University of East Anglia)
    Abstract: As nudge interventions have become more popular, academic research is developing that aims to assess to what extent and under what circumstances these interventions are effective. My paper contributes to this stream of research in a specific context: collating and synthesising evidence on the effectiveness of nudge interventions that aim to increase consumer search and switching in retail financial markets. Following a systematic search strategy, I identified 33 papers containing relevant research, including qualitative studies, online laboratory experiments, field experiments and ex post data analyses, covering a wide range of retail financial products and a number of different types of nudges. The review of these papers results in two main contributions. First, it demonstrates that different study designs serve different purposes in evidence accumulation. In particular, qualitative studies and online lab experiments should not be used to ascertain the magnitude of the intervention’s impact. Second, based on over 400 estimates from the quantitative analyses in these papers, it establishes that the currently available evidence shows that nudges increase consumer search and switching in retail financial markets by 2-3 percentage points on average. The most effective interventions appear to be the ones that make the consumer’s life easier by taking some of the administrative burden over, and the ones that make a relatively major change in the structure of the decision-making environment. Disclosures, reminders, simplifications and informational nudges tend to have a smaller impact. In other words, nudges that change the choice architecture more profoundly have a higher impact on search and switching than nudges that only provide, simplify or highlight information. Overall, while nudge interventions may be efficient on a cost-benefit basis and can lead to large increase in relative terms (e.g. doubling switching rates from 1% to 2%), regulators cannot expect them to alter consumer behaviour to the extent that it would lead to a significant change in the competitive landscape.
    Keywords: Consumers, switching, financial markets
    Date: 2022–07–08

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