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Time Inconsistency, Sophistication, and Commitment An Experimental Study

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  • Zhang, Qing ⓡ

  • Greiner, Ben

Abstract

We experimentally study the relationship between time inconsistency, sophistication about time inconsistency, and self-commitment. Previous research has interpreted demand for commitment devices as evidence for the sophistication of a time-inconsistent decision-maker. In our laboratory experiment, we attempt to measure sophistication directly by way of a cognitive test. We then test the hypothesis that people who are both time-inconsistent and show high cognitive capacity take up commitment devices when offered in the strategic game between their current and their future self. For experimental laboratory commitment choices, we cannot detect a moderating effect of cognition on commitment demand of time-inconsistent subjects. However, we find that the existence of time-inconsistent preferences and sophistication (proxied by cognitive performance) can predict the demand for savings commitment in our hypothetical survey vignette question.

Suggested Citation

  • Zhang, Qing ⓡ & Greiner, Ben, 2020. "Time Inconsistency, Sophistication, and Commitment An Experimental Study," Department for Strategy and Innovation Working Paper Series 12/2020, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus055:7530
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    Cited by:

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    2. Westphal, Ryan, 2024. "People do not demand commitment devices because they might not work," Journal of Economic Behavior & Organization, Elsevier, vol. 228(C).

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    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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