Designing Incentives for Impatient People: An RCT Promoting Exercise to Manage Diabetes

Many people are impatient. We develop a prediction for how to make incentives work particularly well when people are impatient over e↵ort: implement “time-bundled” contracts that make the payment for future e↵ort increase in current e↵ort. We test and find empirical support for this prediction using a randomized evaluation of an incentive program for exercise (walking) among diabetics in India. On average, time-bundled contracts generate as much e↵ort as linear contracts, yet at a reduced cost. Moreover, time-bundled contracts perform meaningfully better among individuals with greater impatience over e↵ort, suggesting that impatience is a contributing mechanism. In contrast, increasing the frequency of payment – which should be e↵ective if individuals are impatient over payment rather than e↵ort – has no e↵ect, suggesting limited impatience over payments. Overall, the incentive program is e↵ective, increasing daily steps by roughly 20 percent (13 minutes of brisk walking) and improving health.