Incentivizing behavioral change: the role of time preferences

How should the design of incentives vary with agent time preferences? We develop two
predictions. First, “bundling” the payment function over time – specifically by making the
payment for future effort increase in current effort – is more effective if individuals are impatient
over effort. Second, increasing the frequency of payment is more effective if individuals are
impatient over payment. We test the efficacy of time-bundling and payment frequency, and their
interactions with impatience, using a randomized evaluation of an incentive program for exercise
among diabetics in India. Consistent with our theoretical predictions, bundling payments over
time meaningfully increases effort among the impatient relative to the patient. In contrast,
increasing payment frequency has limited efficacy, suggesting limited impatience over payments.
On average, incentives increase daily steps by 1,266 (13 minutes of brisk walking) and improve
health