Messages Committing You to Reciprocate: A Field Experiment With “Contactless” Debtors

Behavioural Insights In The Collection Process

There are two main approaches to ensuring public compliance with rules and laws, including debt repayment, namely the deterrence approach and non-deterrence perspective (Alm, 2012; Almenberg, Lusardi, Säve-Söderbergh, & Vestman, 2018; Hallsworth et al., 2017). The deterrence strategy which assumes individuals are rational and concerned only with advancing their private interests. In the case of compliance with debt repayments, this approach assumes that a person’s decision whether to evade paying is based on considering the probability of being caught and the size of fine. Accordingly, compliance policies must focus on vigilant monitoring, the threat of sanctions and penalties, and removing opportunities for non-compliance. This traditional collection process is well known in any financial institution. It is a process that relies on information and decision making taken by a so-called conscious or rational cognitive system (Vlaev & Dolan, 2015). Generally, that process is based on the notion that information about costs (penalties and taxes) is crucial, and that the more information reaches the debtor, the more likely he or she will pay. The presumption is that certain information will lead to a decision based on logic alone.