Observability Increases the Demand for Commitment Devices

Abstract

Previous research often interprets the choice to restrict one’s future opportunity set as evidence for sophisticated time-inconsistency. We propose an additional mechanism that may contribute to the demand for commitment technology: the desire to signal to others. We present a field experiment where participants can choose to give up money if they do not follow through with an action. When commitment choices are made public rather than kept private, we find significantly higher uptake rates.

Keywords: field experiment, commitment, signaling, time inconsistency

JEL Classification: C93, D91