Temptation and Commitment in the Laboratory

Institute for Empirical Research in Economics, University of Zurich Working Paper No. 488

35 Pages Posted: 26 May 2010  

Daniel Houser

George Mason University - Department of Economics

Daniel Schunk

University of Mainz - Gutenberg School of Economics and Management; University of Zurich - Institute for Empirical Research in Economics

Joachim K. Winter

Ludwig Maximilian University of Munich

Erte Xiao

Department of Economics, Monash University

Date Written: May 25, 2010

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.

Keywords: Self-control, willpower, temptation, commitment, laboratory experiment

JEL Classification: D11, C91

Suggested Citation

Houser, Daniel and Schunk, Daniel and Winter, Joachim K. and Xiao, Erte, Temptation and Commitment in the Laboratory (May 25, 2010). Institute for Empirical Research in Economics, University of Zurich Working Paper No. 488. Available at SSRN: https://ssrn.com/abstract=1615379 or http://dx.doi.org/10.2139/ssrn.1615379

Daniel Houser (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Daniel Schunk

University of Mainz - Gutenberg School of Economics and Management ( email )

Mainz
Germany

University of Zurich - Institute for Empirical Research in Economics ( email )

Bluemlisalpstr. 10
Zurich, 8006
Switzerland

Joachim K. Winter

Ludwig Maximilian University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Erte Xiao

Department of Economics, Monash University ( email )

Wellington Road
Victoria, Roodepoort 3145
Australia

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