Wednesday, 3 September 2008

Incentives matter: gym file

This from Tyler Cowen at Marginal Revolution
A Danish chain of gyms is now offering membership free of charge, with the only caveat that you have to show up, in order for the membership to be free. If you fail to show up once per week you will be billed the normal monthly membership fee for that month. This should solve the problem with incentives that gym-membership normally carries - there is suddenly a very large (membership is around 85$ per month) incentive to show up each week.

1 comment:

matt b said...

I predict this gym will fail spectacularly due to adverse selection and moral hazard.

By the way, if moral hazard is referring to something 'good', like exercising frequently, does it become immoral hazard or moral dishazard?