Demand and Supply of Infrequent Payments as a Commitment Device: Evidence from Kenya
- Casaburi, Lorenzo Department of Economics, University of Zürich, Schönbergasse 1, 8001 Zürich, Switzerland (email: )
- Macchiavello, Rocco Department of Management, London School of Economics, Houghton Street, London WC2A2AE, United Kingdom (email: )
Published in:
- American Economic Review. - American Economic Association. - 2019, vol. 109, no. 2, p. 523-555
English
Despite extensive evidence that preferences are often time-inconsistent, there is only scarce evidence of willingness to pay for commitment. Infrequent payments for frequently provided goods and services are a common feature of many markets and they may naturally provide commitment to save for lumpy expenses. Multiple experiments in the Kenyan dairy sector show that: (i) farmers are willing to incur sizable costs to receive infrequent payments as a commitment device, (ii) poor contract enforcement, however, limits competition among buyers in the supply of infrequent payments. We then present a model of demand and supply of infrequent payments and test its additional predictions. (JEL K12, L66, O13, O17, Q12, Q13)
- Language
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- English
- Open access status
- green
- Identifiers
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- DOI 10.1257/aer.20180281
- ISSN 0002-8282
- Persistent URL
- https://sonar.rero.ch/global/documents/18397
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