Time Inconsistency, Sophistication, and Commitment An Experimental Study

Qing ⓡ Zhang () and Ben Greiner

No 12/2020, Department for Strategy and Innovation Working Paper Series from WU Vienna University of Economics and Business

Abstract: We experimentally study the relationship between time inconsistency, sophistication about time inconsistency, and self-commitment. Previous research has interpreted demand for commitment devices as evidence for the sophistication of a time-inconsistent decision-maker. In our laboratory experiment, we attempt to measure sophistication directly by way of a cognitive test. We then test the hypothesis that people who are both time-inconsistent and show high cognitive capacity take up commitment devices when offered in the strategic game between their current and their future self. For experimental laboratory commitment choices, we cannot detect a moderating effect of cognition on commitment demand of time-inconsistent subjects. However, we find that the existence of time-inconsistent preferences and sophistication (proxied by cognitive performance) can predict the demand for savings commitment in our hypothetical survey vignette question.

Keywords: time-inconsistency; sophistication; present bias; future bias (search for similar items in EconPapers)
Date: 2020-03-25
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-neu and nep-upt
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Journal Article: Time inconsistency, sophistication, and commitment: An experimental study (2021)
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