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Andris Saulitis

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This paper examines the extent to which a noncompliant debtor can be induced to pay back the debt by sending a randomly assigned message via mobile phone and e-mail, ranging from a simple reminder to personalized messages and a social norm. In cooperation with a debt-collector enterprise in Latvia, the field experiment was carried out on 24,781 unique cases of consumer debts with unpaid liabilities, ranging from one to 40,060.26 euros. Overall, sending a message to a debtor increases compliance in comparison of not sending a message at all. However, messages, which include debtor's name, agent's name or social norm, do not increase compliance in comparison to a simple reminder message. I also looked at the interaction effect between the content of the message and the debt amount, which has been hardly examined in previous experiments on compliance. Messages with a debtor's name significantly increase compliance in comparison to a simple reminder among the debts smaller than 170 euros. However, such a message is counter-effective for debts larger than 1,340 euros, the same trend is true for a message with the social norm. Hence, a different policy needs to be applied to the debtors who are extensively overindebted in comparison to those with comparatively small debt amounts.