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Commitment Devices

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Author Info

  • Gharad Bryan
  • Dean Karlan
  • Scott Nelson

    ()
    (Department of Economics, Yale University, New Haven, Connecticut 06520)

Abstract

We review the recent evidence on commitment devices and discuss how this evidence relates to theoretical questions about the demand for, and effectiveness of, commitment. Several important distinctions emerge. First, we distinguish between what we call hard and soft commitments and identify how soft commitments, in particular, can help with various dilemmas, both in explaining empirical behavior and in designing effective commitment devices. Second, we highlight the importance of certain modeling assumptions in predicting when commitment devices will be demanded and examine the laboratory and field evidence on the demand for commitment devices. Third, we present the evidence on both informal and formal commitment devices, and we conclude with a discussion of policy implications, including sin taxes, consumer protection, and commitment device design.

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File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.economics.102308.124324
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Bibliographic Info

Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 2 (2010)
Issue (Month): 1 (09)
Pages: 671-698

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Handle: RePEc:anr:reveco:v:2:y:2010:p:671-698

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Related research

Keywords: commitment contracts; present-biased preferences; self-control; temptation models; hyperbolic preferences;

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Citations

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Cited by:
  1. Ubfal, Diego, 2012. "How General Are Time Preferences? Eliciting Good-Specific Discount Rates," IZA Discussion Papers 6774, Institute for the Study of Labor (IZA).
  2. Basu, Karna, 2014. "Commitment savings in informal banking markets," Journal of Development Economics, Elsevier, vol. 107(C), pages 97-111.
  3. Daniel Houser & Daniel Schunk & Joachim Winter & Erte Xiao, 2010. "Temptation and commitment in the laboratory," IEW - Working Papers 488, Institute for Empirical Research in Economics - University of Zurich.
  4. Martin Binder & Leonhard K. Lades, 2013. "Autonomy-enhancing paternalism," Papers on Economics and Evolution 2013-04, Max Planck Institute of Economics, Evolutionary Economics Group.
  5. Brutscher, P-B., 2012. "Making Sense of Oil Stamp Saving Schemes," Cambridge Working Papers in Economics 1203, Faculty of Economics, University of Cambridge.
  6. Ryota Nakamura & Marc Suhrcke & Daniel John Zizzo, 2014. "A Triple Test for Behavioral Economics Models and Public Health Policy," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 14-01, School of Economics, University of East Anglia, Norwich, UK..
  7. Kast, Felipe & Meier, Stephan & Pomeranz, Dina, 2012. "Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device," IZA Discussion Papers 6311, Institute for the Study of Labor (IZA).
  8. Koch, Alexander K. & Nafziger, Julia, 2011. "Goals and Psychological Accounting," IZA Discussion Papers 5802, Institute for the Study of Labor (IZA).
  9. Andrew Leicester & Peter Levell, 2013. "Anti-smoking policies and smoker well-being: evidence from Britain," IFS Working Papers W13/13, Institute for Fiscal Studies.
  10. Tsvetanov, Tsvetan & Segerson, Kathleen, 2013. "Re-evaluating the role of energy efficiency standards: A behavioral economics approach," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 347-363.
  11. Buechel, Berno & Mechtenberg, Lydia & Petersen, Julia, 2014. "Peer Effects and Students’ Self-Control," MPRA Paper 53658, University Library of Munich, Germany.
  12. Leonhard K. Lades, 2012. "Impulsive Consumption and Reflexive Thought: Nudging Ethical Consumer Behavior," Papers on Economics and Evolution 2012-03, Max Planck Institute of Economics, Evolutionary Economics Group.
  13. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
  14. Michael Hamp & Carolina Laureti, 2011. "Balancing flexibility and discipline in microfinance: Innovative financial products that benefit clients and service providers," Working Papers CEB 11-044, ULB -- Universite Libre de Bruxelles.
  15. Elisabeth Gsottbauer & Jeroen den Bergh, 2013. "Bounded rationality and social interaction in negotiating a climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 225-249, September.
  16. Carlsson, Fredrik & Yang, Xiaojun, 2013. "Intertemporal Choice Shifts in Households: Do they occur and are they good?," Working Papers in Economics 569, University of Gothenburg, Department of Economics.

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