Failures of Self-Control: More Data

Just when you worried that preference reversals weren’t real:

Professional bookmakers rarely accept bets from individuals who directly control the outcome of the bet. We analyse a unique exception to this rule and a potential policy innovation in the battle against obesity: a weight loss betting market. If obese individuals have time-inconsistent preferences then commitment mechanisms, such as personal gambles, should help them restrain their short-term impulses and lose weight. Correspondence with the bettors confirms that this is their primary motivation. However, it appears that the bettors in our sample are not particularly skilled at choosing effective commitment mechanisms. Despite payoffs of as high as $7350, approximately 80% of people who spend money to bet on their own behaviour end up losing their bets.1

HT Cheap Talk. Reading this makes me glad to have finished my last Master’s degree requirement today by turning in a review of the literature on intertemporal choice.

  1. Nicholas Burger and John Lynham : Betting on weight loss . . . and losing: personal gambles as commitment mechanisms