How Many Paychecks? An Example of a Self-Imposed Constraint

Robert B Archibald

Economic Inquiry, 1994, vol. 32, issue 4, 696-702

Abstract: Many faculty members prefer to receive their salary in twenty-four equal payments over the entire year as opposed to receiving the salary sooner in eighteen equal payments over the academic year. The author considers two explanations for this choice: (1) it is chosen to eliminate transactions costs associated with administering a similar plan oneself or (2) it is chosen as a self-imposed constraint to insure against one's own potential imprudent behavior. The paper provides a test that clearly supports the second alternative. Copyright 1994 by Oxford University Press.

Date: 1994
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