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Demand and supply of infrequent payments as a commitment device: evidence from Kenya

Lorenzo Casaburi and Rocco Macchiavello ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Despite extensive evidence that preferences are often time-inconsistent, there is only scarce evidence of willingness to pay for commitment. Infrequent payments for frequently provided goods and services are a common feature of many markets and they may naturally provide commitment to save for lumpy expenses. Multiple experiments in the Kenyan dairy sector show that: (i) farmers are willing to incur sizable costs to receive infrequent payments as a commitment device, (ii) poor contract enforcement, however, limits competition among buyers in the supply of infrequent payments. We then present a model of demand and supply of infrequent payments and test its additional predictions.

JEL-codes: K12 L66 O13 O17 Q12 Q13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-exp, nep-law and nep-mfd
Date: 2019-02-01
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Published in American Economic Review, 1, February, 2019, 109(2), pp. 523-555. ISSN: 0002-8282

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Journal Article: Demand and Supply of Infrequent Payments as a Commitment Device: Evidence from Kenya (2019) Downloads
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