Long-Term Contractual Commitments and Our Future Selves

Abstract

This article studies relational contracts whose performance implicates the person of the promisor (as where the promisor is the promisee’s employee). We investigate whether people’s beliefs that their and others’ personalities are relatively malleable (or not) correlate with their tendency to engage in such long-term contracts. Our survey experiment shows that the more people believe that their own personality is intertemporally malleable the less they tend to make long-term commitments; by contrast, the more they believe that others’ personalities are malleable, the more they tend to engage in such commitments. Our findings imply that people’s intuitive tendencies to make long-term commitments align with those that underlie liberal contract law, which is careful about enforcing contracts that constrain the self-determination of contractors’ future selves.