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Observability Increases the Demand for Commitment Devices

15 Pages Posted: 19 Sep 2014 Last revised: 5 Mar 2016

Christine L. Exley

Harvard Business School

Jeffrey Naecker

Wesleyan University - Department of Economics

Date Written: March 4, 2016

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

Suggested Citation

Exley, Christine L. and Naecker, Jeffrey, Observability Increases the Demand for Commitment Devices (March 4, 2016). Harvard Business School NOM Unit Working Paper No. 16-064. Available at SSRN: https://ssrn.com/abstract=2498145 or http://dx.doi.org/10.2139/ssrn.2498145

Christine Exley

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Jeffrey Naecker (Contact Author)

Wesleyan University - Department of Economics ( email )

238 Church Street
Middletown, CT 06459-0007
United States

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