The Impact of Personal Experience on Behavior: Evidence from Video-Rental Fines

Personal experience matters. In a field setting with longitudinal data, we disentangle the effects of learning new information from the effects of personal experience. We demonstrate that experience with a fine, controlling for the effect of learning new information, significantly boosts future compliance. We also show that experience with a large fine boosts compliance more than experience with a small fine, but that the influence of experience with both large and small fines decays sharply over time. <i>This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.</i>