Economists Do It With Models

Warning: “graphic” content…

Bookmark and Share
More Fun With Commitment Devices, Alarm Clock Edition…

May 30th, 2011 · 8 Comments
Behavioral Econ · Just For Fun

I think we’ve been over commitment devices before, but let’s recap: Traditional economists assume that individuals are perfectly rational. Being economically “rational,” in part, requires that an individual’s short-term and long-term preferences are always aligned. For example, this would mean that if I decide on Monday that the best option for me on Friday is to stay in and do work, I will still think that this is the best option when Friday rolls around. Economists call this being “time-consistent,” and it probably doesn’t shock you that most people are not always time-consistent.

It’s generally true that a person’s ahead of time choices are more likely to be aligned with his long-term best interests than are those made to satisfy a need for immediate gratification or whatnot, so some self-aware individuals choose to employ what economists call commitment devices. Simply put, commitment devices are the economic version of Ulysses tying himself to the mast to avoid the sirens, and they range from the mundane (Christmas clubs, for example, where people pay to have their money held hostage until the holiday season) to the ridiculous. On the latter front, I previously introduced you to the concept of the time-delay safe:

I didn’t think I would ever top that in terms of potential humor value, but I think I’ve found a strong contender. Allow me to introduce a behavioral economist’s new favorite alarm clock:

From Mashable:

This design concept might be more sight gag than real product, but it’s clever nonetheless. Bringing new meaning to the phase “you snooze, you lose,” when you place this unforgiving clock across the room from your bed, if you don’t get up when the alarm sounds, it’s going to cost you.

In case you’re curious, it is in fact illegal to destroy currency on purpose. (The “on purpose” part is important, since it would be sad if people got arrested for the whole bills in the pants in the washing machine situation.) As such, I would like to suggest the following option instead:

(From Amazon) This one may roll around the room and make noise if you try to snooze, but at least it won’t inadvertently lower the money supply.

Alternatively, I think that there is an entrepreneurial opportunity to partner with to develop an alarm clock that would automatically charge people who snooze too much. (Under Stickk contacts, the money charged gets donated to charity.) Not surprisingly, was founded (in part) by Ian Ayres, who is an economics and law professor at Yale. He also wrote a book called Carrots and Sticks that talks about this and similar concepts. He’s also fairly tolerant of my antics:

Tags: Behavioral Econ · Just For Fun

8 responses so far ↓

  • 1 Charles Dolci // May 30, 2011 at 8:54 pm

    It seems to me that being “time-INconsistent” is the more rational approach.
    On Friday, when I plan my commitments for Monday, I am faced with X possible courses of action. I evaluate the various opportunity costs and make a plan to do action A.
    But when Sunday night rolls around, I may be faced with a totally different range of possible courses of action and the one with the lowest opportunity cost or the highest marginal utility may now be action B.
    There may be a cost in disappointing those who were dependant on action A, but I can take that into consideration in deciding on my course of action for Monday.

  • 2 Dave // May 31, 2011 at 5:10 pm

    When I was a teenager, I had rather foul language. My mother’s behavior-modification solution was to charge me a quarter every time I “used the Lord’s name in vain”. It was rather effective — in less than a month, my language improved considerably.

    I recently saw a similar example at work: One of our young engineers is from deep in the piney woods of east Texas, and, in spite of a college education, he still speaks like an east Texas native. Our office manager started “fining” him a dollar every time she heard him use bad grammar. His grammar has improved considerably.

  • 3 Michael L. // Jun 6, 2011 at 12:33 am

    I don’t think it’s irrational for an individual to be time inconsistent. As long as he knows that he will be, he will change his behavior accordingly. I’m always skeptical of people who claim they want to change their behavior (i.e. stop talking to their ex, stop procrastinating) and don’t take the precautionary steps to do so. Do they really want to change their behavior or are they just saying so to quiet the naggers who say they should?

    Also, I’m skeptical of Ayer’s Stickk idea. For instance, many of the people on the show “Biggest Loser” gain some if not all the weight they gained on the show back because the incentive to lose isn’t there anymore. The is not beneficial to contestants because they could have just gone on their old ways and had the same result. It really depends on how committed the person is to whatever it is they want (ex. weight loss, smoking cessation)

    On a more positive note, you look quite nice in that photo. Definitely a keeper (talking about he photo, not Ayers).

  • 4 Liryon // Aug 21, 2011 at 5:39 pm

    There is now a charitable app for that

  • 5 how it works // Nov 29, 2011 at 7:08 pm

    Excellent understand, I just transferred that on top of some sort of colleague who has been accomplishing a little exploration with of which. In addition to he / she actually obtained everyone meal because I stumbled upon the item intended for them giggle So well then, i’ll rephrase of which: Thanks intended for meal!

  • 6 Ec Stack For Studying // Jan 15, 2013 at 5:52 pm

    I’m really enjoying the theme/design of your weblog. Do you ever run into any web browser compatibility issues? A small number of my blog readers have complained about my website not operating correctly in Explorer but looks great in Safari. Do you have any tips to help fix this problem?

  • 7 match.Com // Apr 5, 2015 at 3:34 am

    Why visitors still make use of to read news papers when in this technological globe all is presented on net?

  • 8 mujeres hermosas // Apr 24, 2015 at 1:44 am

    Definitely imagine that that you stated. Your favorite justification seemed to be on the web the
    easiest thing to take into accout of. I say to you, I
    certainly get annoyed whilst other folks think about worries that they just don’t realize about.
    You managed to hit the nail upon the top and defined out the whole thing with
    no need side effect , people could take a signal. Will likely be again to get
    more. Thank you

Leave a Comment