17 Dec 2015Working Paper Summaries

Observability Increases the Demand for Commitment Devices

by Christine Exley and Jeffrey Naecker

People often demand commitment so as to avoid self-damaging activities or pursue desirable behavior. This study provides evidence for an additional reason people demand commitment: the desire to signal to others. The observability of individuals’ commitment choices thus proves to be a powerful leverage.

Author 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 could choose to give up money if they did not follow through with an action. If their commitment choice was made public rather than kept private, we find significantly higher uptake rates.