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Temptation and Commitment in the Laboratory

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  • Houser, Daniel
  • Schunk, Daniel
  • Winter, Joachim
  • Xiao, Erte

Abstract

Temptation and self-control in intertemporal choice environments are receiving increasing attention in the theoretical economics literature. Nevertheless, there remains a scarcity of empirical evidence from controlled environments informing behavior under repeated temptations. This is unfortunate in light of the fact that in many natural environments, the same temptation must be repeatedly resisted. This paper fills that gap by reporting data from a novel laboratory study of economic decisions under repeat temptations. Subjects are repeatedly offered an option with instantaneous benefit that also entails a substantial reduction to overall earnings. We show that this option is \"tempting\" in the sense that a substantial fraction of our subjects incur pecuniary costs to eliminate the choice, and thus commit to not choosing the tempting alternative. We compare the timing and price-elasticity of these commitment decisions to predictions from existing theoretical models of decision under temptation. Our data are broadly consistent with theory, with the notable exception that commitment often occurs with delay rather than at the first opportunity. Moreover, the timing of commitment is significantly impacted by the cost of the commitment device. The patterns we report have direct implications for economic theory, and are a first step toward designing mechanisms that promote prudent economic decisions under temptation.

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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 19377.

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Date of creation: 2010
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Publication status: Published in Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Consumer Behaviour and Intertemporal Choice G17-V2 (2010)
Handle: RePEc:lmu:muenar:19377

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References

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  1. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
  2. Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May.
  3. W. Pesendorfer & F. Gul, 1999. "Self-Control and the Theory of Consumption," Princeton Economic Theory Papers 99f2, Economics Department, Princeton University.
  4. Jianjun Miao, 2008. "Option exercise with temptation," Economic Theory, Springer, vol. 34(3), pages 473-501, March.
  5. Caillaud, Bernard & Jullien, Bruno, 2000. "Modelling time-inconsistent preferences," European Economic Review, Elsevier, vol. 44(4-6), pages 1116-1124, May.
  6. Drew Fudenberg & David K Levine, 2005. "A Dual Self Model of Impulse Control," Levine's Working Paper Archive 618897000000000876, David K. Levine.
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  9. Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
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  11. Ozdenoren, Emre & Salant, Stephen & Silverman, Dan, 2010. "Willpower and the Optimal Control of Visceral Urges," Discussion Papers dp-10-35, Resources For the Future.
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  13. Jason Aimone & Daniel Houser, 2008. "What You Don't Know Won't Hurt You: A Laboratory Analysis of Betrayal Aversion," Working Papers 1008, George Mason University, Interdisciplinary Center for Economic Science, revised Sep 2008.
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  17. Nicholas Burger & Gary Charness & John Lynham, 2008. "Three Field Experiments on Procrastination and Willpower," Levine's Working Paper Archive 122247000000002399, David K. Levine.
  18. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S164-S187, February.
  19. Xavier Gin� & Dean Karlan & Jonathan Zinman, 2010. "Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 213-35, October.
  20. Kathleen D. Vohs & Ronald J. Faber, 2007. "Spent Resources: Self-Regulatory Resource Availability Affects Impulse Buying," Journal of Consumer Research, University of Chicago Press, vol. 33(4), pages 537-547, 01.
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Cited by:
  1. Berno Buechel & Lydia Mechtenberg & Julia Petersen, 2014. "Peer Effects and Students’ Self-Control," SFB 649 Discussion Papers SFB649DP2014-024, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  2. Kirchkamp, Oliver & Prömpers, Henning, 2013. "Discharge of residual debt: Do private and institutional lenders differ?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79851, Verein für Socialpolitik / German Economic Association.
  3. Bucciol, Alessandro & Houser, Daniel & Piovesan, Marco, 2011. "Temptation and productivity: A field experiment with children," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 126-136, April.
  4. repec:ran:wpaper:895 is not listed on IDEAS
  5. Alberto Bisin & Kyle Hyndman, 2014. "Present-Bias, Procrastination and Deadlines in a Field Experiment," NBER Working Papers 19874, National Bureau of Economic Research, Inc.
  6. 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.
  7. Katharina M. Eckartz, 2014. "Task enjoyment and opportunity costs in the lab - the effect of financial incentives on performance in real effort tasks," Jena Economic Research Papers 2014-005, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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