AbstractWe review the theoretical and empirical literature on commitment devices.A commitment device is any arrangement, entered into by an individual, with the aim of making it easier to fulfill his or her own future plans. We argue that there is growing empirical evidence supporting the proposition that people demand commitment devices and that these devices can change behavior. We highlight the importance of further research exploring soft commitment – those involving only psychological costs – and the welfare consequences of hard commitments – those involving actual costs – especially in the presence of bounded rationality.
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Bibliographic InfoPaper provided by Economic Growth Center, Yale University in its series Working Papers with number 980.
Length: 37 pages
Date of creation: Oct 2009
Date of revision:
consumer/household economics; institutional and behavioral economics;
Other versions of this item:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-CBE-2009-11-14 (Cognitive & Behavioural Economics)
- NEP-EVO-2009-11-14 (Evolutionary Economics)
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- B. Douglas Bernheim & Jonathan Meer & Neva K. Novarro, 2012. "Do Consumers Exploit Precommitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption," NBER Working Papers 17762, National Bureau of Economic Research, Inc.
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