In an ultimatum game experiment, financial incentives were varied by a factor of twenty-five. Consistent with prior results, changes in stakes had only a small effect on play for inexperienced players. However, rejections were less frequent the higher the stakes and proposals in the high stakes declined slowly as proposers gained experience. The lower rejection frequency when stakes were higher can be explained by the added power of multiple observations per subject in this experiment. A model of learning suggests that the lower rejection frequency is the reason proposers in higher stakes learn to make lower offers.

This paper studies a novel method to help people make better decisions by providing information immediately after customers make a costly transaction. We examine an intervention by a major financial institution in Australia, where credit card customers in a treatment group received a text message immediately after each high-cost transaction. The notification informed them that the transaction resulted in an additional fee and that a higher interest rate would apply immediately. This immediate ex-post information nudge reduces the number of subsequent high-cost transactions by 6% and increases the likelihood of making a repayment on the day they were nudged by 5%. This evidence is consistent with the ex-post information campaign increasing awareness among customers about the fees and higher interest rate which subsequently caused them to adjust their credit card usage to save money. More generally, this evidence provides a novel method to help people make better decisions by nudging immediately after rather than before an event.