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Pension contributions as a commitment device: Evidence of sophistication among time-inconsistent households

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  • Sourdin, Patricia

Abstract

Sophisticated agents who are aware of their self-control problems value commitment devices that constrain future choices. Using Australian household data I test whether these households value commitment devices in the form of illiquid pension contributions. Estimating probabilistic choice models, the results confirm the conjecture that households with problems of self-control are more likely to invest in illiquid pensions while less likely to hold very liquid forms of assets.

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  • Sourdin, Patricia, 2008. "Pension contributions as a commitment device: Evidence of sophistication among time-inconsistent households," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 577-596, August.
    • Handle: RePEc:eee:joepsy:v:29:y:2008:i:4:p:577-596
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