Which early withdrawal penalty attracts the most deposits to a commitment savings account?

• 成果类型: Article
• 署名作者: Beshears, John; Choi, James J.; Harris, Christopher; Laibson, David; Madrian, Brigitte C.; Sakong, Jung
• 署名单位: Harvard University; National Bureau of Economic Research; Yale University; University of Cambridge; Brigham Young University; Federal Reserve System - USA; Federal Reserve Bank - Chicago
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2020.104144
• 发表日期: 2020
• 关键词: Quasi-hyperbolic discounting; present bias; Sophistication; naivete; COMMITMENT; flexibility; savings; Contract design; Defined contribution retirement plan; 401(k); IRA

摘要

Previous research has shown that some people voluntarily use commitment contracts that restrict their own choice sets. We study how people divide money between two accounts: a liquid account that permits unrestricted withdrawals and a commitment account that is randomly assigned in a between-subject design to have either a 10% early withdrawal penalty, or a 20% early withdrawal penalty, or not to allow early withdrawals at all (i.e., an infinite penalty). When the liquid account and the commitment account pay the same interest rate, higher early-withdrawal penalties attract more commitment account deposits. This pattern is predicted by the hypothesis that some participants are partially- or fully-sophisticated present-biased agents. Such agents perceive that higher penalties generate greater scope for commitment by disincentivizing (penalized) early withdrawals. The experiment also shows that when the commitment account pays a higher interest rate than the liquid account, the positive empirical slope relating penalties and commitment deposits is flattened, suggesting that naive present-biased agents or agents with standard exponential discounting are also in our sample. Across all of our experimental treatments, higher early withdrawal penalties on the commitment account sometimes increase and never reduce allocations to the commitment account. (C) 2020 Elsevier B.V. All rights reserved.