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Journal article
Who Chooses Commitment? Evidence and Welfare Implications
The Review of economic studies, v 89(3), pp 1205-1244
07 May 2022
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This article investigates whether offers of commitment contracts, in the form of self-imposed choice-set restrictions and penalties with no financial upside, are well-targeted tools for addressing self-control problems. In an experiment on gym attendance (N = 1, 248), we examine take-up of commitment contracts and also introduce a separate elicitation task to identify actual and perceived time inconsistency. There is high take-up of commitment contracts for greater gym attendance, resulting in significant increases in exercise. However, this take-up is influenced both by noisy valuation and incorrect beliefs about one's time inconsistency. Approximately half of the people who take up commitment contracts for higher gym attendance also take up commitment contracts for lower gym attendance. There is little association between commitment contract take-up and reduced-form and structural estimates of actual or perceived time inconsistency. A novel information treatment providing an exogenous shock to awareness of time inconsistency reduces demand for commitment contracts. Structural estimates of a model of quasi-hyperbolic discounting and gym attendance imply that offering our commitment contracts lowers consumer surplus and is less socially efficient than utilizing linear exercise subsidies that achieve the same average change in behaviour.
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Details
- Title
- Who Chooses Commitment? Evidence and Welfare Implications
- Creators
- Mariana Carrera - Montana State UniversityHeather Royer - UC Santa Barbara and NBERMark Stehr - Drexel UniversityJustin Sydnor - University of Wisconsin–MadisonDmitry Taubinsky - University of California, Berkeley
- Publication Details
- The Review of economic studies, v 89(3), pp 1205-1244
- Publisher
- Oxford Univ Press
- Number of pages
- 40
- Grant note
- Alfred P. Sloan Foundation R21AG042051 / NIH; United States Department of Health & Human Services; National Institutes of Health (NIH) - USA
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics); Center for Public Policy
- Web of Science ID
- WOS:000764095800001
- Scopus ID
- 2-s2.0-85133003827
- Other Identifier
- 991019168296104721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Economics