Commitment Devices

Posted: 18 Oct 2010

See all articles by Gharad Bryan

Gharad Bryan

London School of Economics & Political Science (LSE) - Department of Economics

Dean S. Karlan

Yale University; Innovations for Poverty Action; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Scott Nelson

Massachusetts Institute of Technology (MIT), Department of Economics, Students

Date Written: June 2010

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.

Suggested Citation

Bryan, Gharad and Karlan, Dean S. and Nelson, Scott, Commitment Devices (June 2010). Annual Review of Economics, Vol. 2, pp. 671-698, 2010. Available at SSRN: https://ssrn.com/abstract=1693017 or http://dx.doi.org/10.1146/annurev.economics.102308.124324

Gharad Bryan

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Dean S. Karlan (Contact Author)

Yale University ( email )

Box 208269
New Haven, CT 06520-8269
United States

Innovations for Poverty Action ( email )

1731 Connecticut Ave, 4th floor
New Haven, CT 20009
United States

Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab ( email )

E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Scott Nelson

Massachusetts Institute of Technology (MIT), Department of Economics, Students ( email )

50 Memorial Drive
Bldg E52
Cambridge, MA 02142
United States

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