Long-Term Contractual Commitments and Our Future Selves

This Article focuses on relational contracts whose performance implicates the person of the promisor (as where the promisor is the promisee’s employee). We seek to study how people perceive these types of long-term commitments. Our question, more specifically, is whether their beliefs that their and others’ personalities are relatively malleable (or not) correlate with their tendency to engage in such long-term contracts.To address this question we designed a survey experiment which exploits the variation that exists (as we’ve shown) between people’s perceptions of themselves and others, to better understand what makes them make long-term commitments. Testing our question in two contexts – non-compete employment condition and covenant marriage – we find that the more people believe that their own personality is intertemporally malleable the less they tend to make long-term commitments; by contrast, we demonstrate that the more they believe that others’ personality is 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. Our study may also open up directions for future research as per the possible causes of people’s divergent views as to the malleability of their and others’ personalities, as well as the possibility that these views may correlate with socio-economic inequalities and that they may generate systemic effects on parties’ bargaining power in the context of certain long-term contractual commitments