Time Inconsistency, Sophistication, and Commitment
An Experimental Study

Qing Zhang; Ben Greiner

doi:10.57938/744bf6c5-540a-492c-ae6f-a7cbd56bce80

Time Inconsistency, Sophistication, and Commitment An Experimental Study

Qing Zhang
, Ben Greiner

Publication: Working/Discussion Paper › WU Working Paper and Case

429 Downloads (Pure)

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.

Original language	English
Place of Publication	Vienna
Publisher	WU Vienna University of Economics and Business
DOIs	https://doi.org/10.57938/744bf6c5-540a-492c-ae6f-a7cbd56bce80
Publication status	Published - 25 Mar 2020

Publication series

Series	Department of Strategy and Innovation Working Paper Series
Number	12/2020

WU Working Papes and Cases

Department of Strategy and Innovation Working Paper Series

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10.57938/744bf6c5-540a-492c-ae6f-a7cbd56bce80Licence: Unspecified

Wp2020-12Final published version, 595 KBLicence: Unspecified

Cite this

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AB - 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.

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