Question

Clocky is a commitment device to help overcome time inconsistency. Which of the following are the time periods over which someone might have inconsistent preferences and need Clocky's help? \(\left[\mathrm{LO}_{23} .3\right]\) a. Between the time the person hits the snooze button and the time the alarm goes off again. b. Between the time the person sets the alarm the previous night and the time the alarm goes off. c. Between the time the person actually gets out of bed one morning and the time he sets his alarm for the next morning.

Short answer

Periods (a) and (b) exhibit time inconsistency.

Step-by-step solution

Understanding Time Inconsistency

Time inconsistency refers to a situation where someone's preferences change over time in such a way that what was preferred at one point in time is no longer preferred at a future point in time. Clocky helps people stay consistent with their original intentions set at a previous point in time.

Analyzing Option a

For option (a), consider the time period between when the person hits the snooze button and when the alarm goes off again. The inconsistency could arise because the person initially intends to get an additional few minutes of sleep but may not want to wake up once the snooze period is over.

Analyzing Option b

For option (b), consider the time between when the alarm is set the night before and when the alarm goes off the next morning. The person might set the alarm with the intention of waking up early, but their preferences change in the morning, leading them to desire more sleep.

Analyzing Option c

For option (c), consider the time between when the person actually gets out of bed one morning and when they set their alarm for the next morning. This situation might not involve inconsistency related to Clocky's function, as the person is already up and the decision is made for the next day.

Identifying Relevant Periods for Time Inconsistency

Based on the analyses, options (a) and (b) align with scenarios where time inconsistency is evident. In both, the person's initial intention is disrupted by a later change in preference. In contrast, option (c) does not typically involve a change between original intentions and subsequent preferences that would require Clocky's intervention.

Key concepts

Commitment Device

A commitment device is a tool or strategy that helps individuals stay true to their goals and intentions, particularly in situations where they might face temptation or a shift in preferences. It's like making a promise to your future self to stick to a plan. Commitment devices work by both restricting future choices and providing incentives to adhere to a desired course of action.
Imagine you want to wake up early every day, but you often find yourself snoozing your alarm. A commitment device, like Clocky, ensures you adhere to your intention by physically moving away from you, making it harder to continue snoozing.

• Commitment devices can be physical objects, like Clocky, or personal strategies, such as a stern note-to-self.
• The effectiveness of a commitment device depends on how well it prevents preference changes over time.

Exploring how these devices function can offer valuable insights into successful personal goal setting.

Behavioral Economics

Behavioral economics examines how psychological factors influence economic decision making. Unlike traditional economics, which assumes individuals always make rational choices, behavioral economics delves into why people sometimes make irrational decisions.
Commitment devices are rooted in the principles of behavioral economics. They acknowledge our human tendencies towards procrastination or preference shifts and provide a way to pre-commit to certain actions. These tools help navigate the mental barriers of future regret or inconsistent habits.

• Behavioral economics helps identify why people might set an early alarm, yet still crave more sleep in the morning.
• Understanding these behaviors can lead to developing effective strategies like commitment devices.

Thus, studying behavioral economics helps us understand the need for tools like Clocky.

Decision Making

Decision making involves selecting a course of action from multiple options. It's a critical part of everyday living and significantly influenced by time inconsistency.
In the context of Clocky, decision making is at play when deciding bedtime and morning wake-up schedules. You might choose to set your alarm with positive intentions, yet in the morning, when comfort and sleep call, your decision changes. This is where commitment devices become crucial. They help you remain committed to your original decision.

• Effective decision making requires understanding and planning for potential future preference changes.
• Commitment devices act as an anchor to your initial goals, helping resist the temptation for immediate gratification.

Incorporating insights from decision-making processes can help in designing better personal routines.

Preference Change

Preference change is the tendency of individuals' choices and desires to differ over time, often driven by changing circumstances or immediate temptations.
This concept is central to time inconsistency, and highlights why commitment devices are so useful. For instance, at night, you might prefer to set an early alarm for productivity, but come morning, your preference might shift towards sleeping longer. This shift can derail your original intentions without a pre-committed strategy.
Recognizing preference changes is key to understanding why achieving some goals is challenging.

• Preferences often change due to emotional states or environmental factors.
• Commitment devices help circumvent these changes, ensuring consistency in behavior.

Understanding preference change and its impact aids in managing personal and economic decisions more effectively.