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DPE Tuesday Talk Series: Heather Royer, “How are Preferences For Commitment Revealed?”

The Division of Politics and Economics invites the CGU community to attend this week’s Tuesday Lunch Talk featuring Heather Royer, Assistant Professor of Economics at University of California Santa Barbara. Lunch will be provided.

Heather Royer

Bio:
Heather Royer’s research focuses primarily on health economics. Her current research focuses on trying to disentangle the causal effect of education on health and fertility. She also has recently become interested in how information and incentives may affect health behaviors such as eating healthy and exercising regularly. Her work has been supported by grants from the National Institutes of Health, the National Science Foundation, and the Robert Wood Johnson Foundation.

Talk Title: How are Preferences For Commitment Revealed?

Description:
A large literature treats take-up of commitment contracts, in the form of choice-set restrictions or penalties, as a smoking gun for (awareness of) self-control problems. This paper provides new techniques for examining the validity of this assumption, as well as a new approach for detecting (awareness of) self-control problems. Theoretically, we show that with some uncertainty about the future, demand for commitment contracts is closer to a special case than to a robust implication of models of limited self-control. In a field experiment with 1292 members of a fitness facility, we find that many participants take up commitment contracts both for going to the gym more and for going to the gym less, and there is a significant positive correlation in demand for these two types of contracts. This suggests that commitment contract take-up reflects, at least in part, something other than the desire to change own future behavior, such as demand effects or “noisy valuation.” Moreover, we find that commitment contract take-up is negatively related to awareness of self-control problems: a novel information treatment that increased awareness of self-control problems reduced demand for commitment contracts. We address the limitations of using commitment contracts as a measurement tool by showing that a combination of belief forecasts and willingness to pay for linear incentives provides more robust identification of limited self-control and people’s awareness of it. We use the methodology to obtain some of the first parameter estimates of partially-sophisticated quasi-hyperbolic discounting in the field.