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Pre-Commitment and Flexibility in a Time Decision Experiment

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  • Casari, Marco

Abstract

This study presents experimental data on pre-commitment and flexibility where monetary rewards are delivered with an actual delay. Preference for pre-commitment is defined as willingness to pay a cost to restrict the size of the choice set available in the future. Preference for flexibility is defined as willingness to pay a cost to enlarge the choice set available in the future. The existing empirical evidence about these phenomena is rather limited. On the other hand, models of intertemporal choice differ widely on these issues, with some predicting only demand for pre-commitment, others only demand for flexibility, while others neither one. We find that two-thirds of the subjects cannot be accounted for with the canonical exponential discounting model and that there is demand for both pre-commitment and flexibility.

Suggested Citation

  • Casari, Marco, 2006. "Pre-Commitment and Flexibility in a Time Decision Experiment," Purdue University Economics Working Papers 1183, Purdue University, Department of Economics.
  • Handle: RePEc:pur:prukra:1183
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    2. Marco Casari & Davide Dragone, 2015. "Choice reversal without temptation: A dynamic experiment on time preferences," Journal of Risk and Uncertainty, Springer, vol. 50(2), pages 119-140, April.
    3. repec:eee:hapoch:v1_865 is not listed on IDEAS
    4. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    5. Marco Casari, 2009. "Pre-commitment and flexibility in a time decision experiment," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 117-141, April.
    6. Barton L. Lipman & Wolfgang Pesendorfer, 2010. "Temptation," Boston University - Department of Economics - Working Papers Series WP2010-021, Boston University - Department of Economics.
    7. Schlueter, Tobias & Sievers, Soenke & Hartmann-Wendels, Thomas, 2015. "Bank funding stability, pricing strategies and the guidance of depositors," Journal of Banking & Finance, Elsevier, vol. 51(C), pages 43-61.
    8. Matthias Uhl, 2011. "Do Self-Committers Mind Other-Imposed Commitment? An Experiment on Weak Paternalism," Rationality, Markets and Morals, Frankfurt School Verlag, Frankfurt School of Finance & Management, vol. 2(40), June.
    9. Kirsten Rohde, 2010. "The hyperbolic factor: A measure of time inconsistency," Journal of Risk and Uncertainty, Springer, vol. 41(2), pages 125-140, October.
    10. Marco Casari & Davide Dragone, 2010. "Impatience, Anticipatory Feelings and Uncertainty: A Dynamic Experiment on Time Preferences," Jena Economic Research Papers 2010-087, Friedrich-Schiller-University Jena.
    11. Wei-Yin Hu & Olivia S. Mitchell & Cynthia Pagliaro & Stephen P. Utkus, 2013. "Evaluating Web-based Savings Interventions: A Preliminary Assessment," Working Papers wp299, University of Michigan, Michigan Retirement Research Center.
    12. Alberto Bisin & Kyle Hyndman, 2014. "Present-Bias, Procrastination and Deadlines in a Field Experiment," NBER Working Papers 19874, National Bureau of Economic Research, Inc.
    13. Sung-Jin Cho & John Rust, 2015. "Precommitments for Financial Self-Control:Evidence from Credit Card Borrowing," 2015 Meeting Papers 33, Society for Economic Dynamics.
    14. repec:eee:gamebe:v:107:y:2018:i:c:p:329-344 is not listed on IDEAS
    15. Benhabib, Jess & Bisin, Alberto & Schotter, Andrew, 2010. "Present-bias, quasi-hyperbolic discounting, and fixed costs," Games and Economic Behavior, Elsevier, vol. 69(2), pages 205-223, July.
    16. Schlüter, Tobias & Sievers, Sönke & Hartmann-Wendels, Thomas, 2012. "How can banks effectively stabilize their retail customers saving behavior? The impact of contractual rewards on saving persistence and cash flow volatility," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62057, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    experiments ; time preferences ; time inconsistency ; preference for commitment ; preference for flexibility ; discounting;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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