Overconfidence, Underconfidence, and the Use of Persuasive Messages in the Attainment of Savings Goals

The presentation analyzes whether the success of persuasive messages depends on an individual's behavioral bias: If at the onset of a savings period saving goals are chosen with over- or underconfidence, i.e. individuals over- or underestimate their savings potential, individuals might save too little and even stop saving altogether. Thus, given an individual's characteristics different dis- or encouraging messages might help to achieve the savings goals. The messages encourage some individuals to reconsider their self-set goal and to choose either a more ambitious or a more cautious goal. In our experiment we randomly assign moneyboxes in combination with these persuasive messages to 940 current and former clients of a microfinance institution in rural Ethiopia. Two baseline surveys and a recently collected follow-up data allow for an in-depth analysis of the mechanisms and the steps involved in the persuasive process that is likely to lead to different saving performances.