Institute for Research on Labor and Employment

Many people do not purchase products that would appear to benefit them. For example, the price of an efficient cookstove can be less than a few months’ savings on fuel. If liquidity constraints, present bias, and poor information on fuel savings and stove durability are barriers, then combining a free trial, time payments, and the right to return the stove at any time should increase sales. In a randomized trial, this offer increases uptake of an efficient charcoal-burning stove in Kampala, Uganda, from 4% to 46%. We provide additional evidence that both liquidity constraints and imperfect information were important barriers.