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We review the recent evidence on commitment devices and discuss how this evidence relates to theoretical questions about the demand for, and effectiveness of, commitment. Several important distinctions emerge. First, we distinguish between what we call hard and soft commitments and identify how soft commitments, in particular, can help with various dilemmas, both in explaining empirical behavior and in designing effective commitment devices. Second, we highlight the importance of certain modeling assumptions in predicting when commitment devices will be demanded and examine the laboratory and field evidence on the demand for commitment devices. Third, we present the evidence on both informal and formal commitment devices, and we conclude with a discussion of policy implications, including sin taxes, consumer protection, and commitment device design.

PurposeThe purpose of this paper is to propose a dedication-constraint-temptation (DCT) model to study the factors influencing customers’ loyalty to mobile data service (MDS) providers. The DCT model explicitly explores the important yet overlooked role of alternative attractiveness (the temptation-based mechanism) as a mediator and the boundary condition of their interrelationships (e.g. relationship length). The model also integrates new and established antecedents of customer-based brand equity (C-BBE) (the dedication-based mechanism) and switching barriers (the constraint-based mechanism).Design/methodology/approachThe proposed model is tested using partial least squares–structural equation modeling with a sample of 331 MDS users.FindingsThe results indicate that C-BBE has an indirect effect on customer loyalty (via alternative attractiveness) in both relationship groups (shorter- vs longer-term). However, the indirect effect of switching barriers on customer loyalty only exists in longer established relationships. The results from multi-group analysis reveal that the effect of switching barriers on alternative attractiveness significantly differs across groups. In addition, customer value anticipation and procedural switching costs appear to be the most salient antecedents of C-BBE and switching barriers for both groups.Originality/valueThis study makes an incremental contribution by incorporating the temptation-based mechanism as a mediator and relationship length as a moderator into the dedication-constraint model. This study also extends the information systems and brand management literatures by demonstrating the strategic importance of customer value anticipation in the information and communication technology brand equity-building.

We develop an overlapping-generations model for a closed economy with uncertainty on labor income and mortality risk to show that unfunded social security programs may increase welfare in economies where agents are affected by self-control problems à la Gul and Pesendorfer (2001, Econometrica 69, 1403). We depart from the existing literature by setting the agent's preference parameters to match target levels of macro-variables observed in the real U.S. economy. In our approach, economies with tempted and nontempted agents are indistinguishable in terms of aggregate consumption, labor, and saving behavior when social security provides a replacement rate of 40% (as in the United States). This situation makes agents bear costly self-control problems over more years. Our simulations indicate that social security improves welfare with degrees of temptation equal to 11% or higher. A social security program with a replacement rate of 40% finds support for degrees of temptation not lower than 15%.

As the science of self-control matures, the organization and integration of its key concepts becomes increasingly important. In response, we identified seven major components or \"nodes\" in current theories and research bearing on self-control: desire, higher order goal, desire-goal conflict, control motivation, control capacity, control effort, and enactment constraints. To unify these diverse and interdisciplinary areas of research, we formulated the interplay of these components in an integrative model of self-control. In this model, desire and an at least partly incompatible higher order goal generate desire-goal conflict, which activates control motivation. Control motivation and control capacity interactively determine potential control effort. The actual control effort invested is determined by several moderators, including desire strength, perceived skill, and competing goals. Actual control effort and desire strength compete to determine a prevailing force, which ultimately determines behavior, provided that enactment constraints do not impede it. The proposed theoretical framework is useful for highlighting several new directions for research on self-control and for classifying self-control failures and self-control interventions.

We build a game-theoretic model to examine how better demand forecasting resulting from algorithms, machine learning, and artificial intelligence affects the sustainability of collusion in an industry. We find that, although better forecasting allows colluding firms to better tailor prices to demand conditions, it also increases each firm’s temptation to deviate to a lower price in time periods of high predicted demand. Overall, our research suggests that, despite concerns expressed by policy makers, better forecasting and algorithms can lead to lower prices and higher consumer surplus. This paper was accepted by Joshua Gans, business strategy.

We propose that a simple \"dual-self\" model gives a unified explanation for several empirical regularities, including the apparent time inconsistency that has motivated models of quasi-hyperbolic discounting and Rabin's paradox of risk aversion in the large and small. The model also implies that self-control costs imply excess delay, as in the O'Donoghue and Rabin models of quasi-hyperbolic utility, and it explains experimental evidence that increased cognitive load makes temptations harder to resist. The base version of our model is consistent with the Gul-Pesendorfer axioms, but we argue that these axioms must be relaxed to account for the effect of cognitive load.

This paper provides evidence on the importance of reputation in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. A seller's reputation is defined by buyer's beliefs about seller's reliability. We show that (i) due to lack of enforcement, the volume of trade is constrained by the value of the relationship; (ii) the value of the relationship increases with the age of the relationship; and (iii) during an exogenous negative supply shock deliveries are an inverted-U shaped function of relationship's age. Models exclusively focusing on enforcement or insurance considerations cannot account for the evidence.

Imagined futures, once a vital topic of theoretical inquiry within the sociology of culture, have been sidelined in recent decades. Rational choice models cannot explain the seemingly irrational optimism of youth aspirations, pointing to the need to explore other alternatives. This article incorporates insights from pragmatist theory and cognitive sociology to examine the relationship between imagined futures and present actions and experiences in rural Malawi, where future optimism appears particularly unfounded. Drawing from in-depth interviews and archival sources documenting ideological campaigns promoting schooling, the author shows that four elements are understood to jointly produce educational success: ambitious career goals, sustained effort, unflagging optimism, and resistance to temptation. Aspirations should be interpreted not as rational calculations, but instead as assertions of a virtuous identity, claims to be \"one who aspires.\"

In this study, we develop a theoretical model of monetary intelligence (MI), explore the extent to which individuals' meaning of money is related to the pursuit of materialistic purposes, and test our model using the whole sample and across college major and gender. We select the 15-item love of money (LOM) construct—Factors Good, Evil (Affective), Budget (Behavioral), Achievement, and Power (Cognitive)—from the Money Ethic Scale and Factors Success and Centrality and two indicators—from the Materialism Scale. Based on our data collected from 330 university students in Czech Republic, we provide the following findings. First, our formative models are superior to our reflective models. Second, for the reflective model, money represents Power, Good, Achievement, and not Evil, in the context of materialism. Our formative model suggests that those who pursuit materialism cherish Achievement (vanity) but Budget their money poorly. Third, multi-group analyses illustrate that humanities students (62.4 % female) consider money as Evil and Budget their money poorly, while those in natural sciences (37.6 % female) do not. Further, men are obsessed with Achievement, whereas women do not Budget their money properly, suggesting reflective temptation for males and impulsive temptation for females. Our novel discoveries shed new lights on the relationships between LOM and materialism and offer practical implications to the field of consumer behavior and business ethics.