Save More Today or Tomorrow: The Role of Urgency in Pre-commitment Design

76 Pages Posted: 30 Jun 2020 Last revised: 9 Nov 2021

See all articles by Joseph Reiff

Joseph Reiff

University of California, Los Angeles (UCLA) - Anderson School of Management

Hengchen Dai

University of California, Los Angeles (UCLA) - Anderson School of Management

John Beshears

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Katherine L. Milkman

University of Pennsylvania - The Wharton School

Shlomo benartzi

affiliation not provided to SSRN

Date Written: June 11, 2020

Abstract

To encourage farsighted behaviors, past research suggests that marketers may be wise to invite consumers to pre-commit to adopt them “later”. However, we propose that people will draw different inferences from different types of pre-commitment offers, and that certain pre- commitment offers may even reduce the appeal of farsighted behaviors. Specifically, we theorize that simultaneously offering consumers the opportunity to start a farsighted activity now or later (i.e., offering “simultaneous pre-commitment”) may signal that the activity is not urgently recommended; however, offering consumers the opportunity to begin that activity immediately and then, only if they decline, inviting them to instead begin later (i.e., offering “sequential pre- commitment”) may signal just the opposite. In a multi-site field experiment (N=5,196), we find that simultaneously giving consumers the chance to start saving now or later reduced retirement savings. In two pre-registered lab studies (N=5,080), we show that simultaneous pre-commitment leads people to infer that taking action is not urgently recommended, which decreases adoption. Importantly, we document that offering sequential pre-commitment increases inferred urgency, thus boosting adoption. Together, this research advances knowledge about the limits and potential of pre-commitment.

Keywords: pre-commitment, inference making, farsighted decisions, choice architecture, field experiment

JEL Classification: D14, D12, D03, D02, D91, M31

Suggested Citation

Reiff, Joseph and Dai, Hengchen and Beshears, John and Milkman, Katherine L. and benartzi, Shlomo, Save More Today or Tomorrow: The Role of Urgency in Pre-commitment Design (June 11, 2020). Available at SSRN: https://ssrn.com/abstract=3625338 or http://dx.doi.org/10.2139/ssrn.3625338

Joseph Reiff (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Hengchen Dai

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

John Beshears

Harvard University - Business School (HBS) ( email )

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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Katherine L. Milkman

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104
United States

Shlomo Benartzi

affiliation not provided to SSRN

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