I’m happy to announce that my Think Forward research proposal has been accepted. In this study I will analyse the effects of financial warnings on irresponsible spending behaviour. The project will run until March 2018.
“The aim of the Think Forward Research Challenge is to explore how existing research into how consumers make financial decisions can be made directly relevant to the lives of consumers. This will have a substantial impact on actual tools that will help people make better financial decisions.”
Consumers may take financially irresponsible decisions by buying expensive products that they cannot really afford, letting short term temptation win over long-term goals, and creating “buyer remorse.” This is especially the case with online transactions, where there is less “pain of payment” during financial transactions. Dan Ariely discusses several mechanisms of how to increase self-control in these situations. One of the options he describes is to create “red buttons” or self-control contracts, helping buyers to identify potentially harmful purchases before they are made, and protecting themselves against harmful spending behavior.