This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Journal: Microeconomics: Vol. 3 No. 4 (November 2011)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Micro - All Issues

AEJ: Micro Forthcoming Articles

Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements

Article Citation

Basu, Karna. 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements." American Economic Journal: Microeconomics, 3(4): 143-71.

DOI: 10.1257/mic.3.4.143

Abstract

People across the developing world join rotational savings and credit associations (roscas) to fund repeated purchases of nondivisible goods. When the scope for punishment is weak, there is a natural question about why agents not defect from roscas. This paper models roscas as commitment savings devices and derives conditions under which hyperbolic discounters will never defect, even in the absence of formal contracting, social punishment, and reputation. I show why, unlike with standard commitment devices, a hyperbolic discounter will not postpone entry into a rosca. Finally, this paper makes predictions about the relative survival of random and fixed roscas. (JEL D14, D91, O12)

Article Full-Text Access

Full-text Article

Authors

Basu, Karna (Hunter College, CUNY)

JEL Classifications

D14: Personal Finance
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
O12: Microeconomic Analyses of Economic Development

Comments

View Comments on This Article (0) | Login to post a comment


American Economic Journal: Microeconomics


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Micro - All Issues

AEJ: Micro - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us