Commitment devices

Gharad Bryan*, Dean Karlan, Scott Nelson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

152 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)671-698
Number of pages28
JournalAnnual Review of Economics
Volume2
DOIs
StatePublished - Dec 1 2010

Keywords

  • Commitment contracts
  • Hyperbolic preferences
  • Present-biased preferences
  • Self-control
  • Temptation models

ASJC Scopus subject areas

  • Economics and Econometrics

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