(Un)risky commitments

Abstract

There is increasing concern regarding how uncertainty influences the demand for commitment devices, especially due to the complexity it introduces into the decision-making environment while activating risk preferences. This study examines how the proportion of automated transactions varies on a Nigerian FinTech platform, given exposure to uncertainty and individual risk aversion in two distinct risk-level environments. One environment is risk-free, while the other is characterised by uncertainty about future outcomes. Our findings support the hypothesis that risk aversion varies inversely with the demand for commitment, specifically among low and medium-risk groups. Additionally, we find significant differences in the behaviour of women and the influence of interest rates on automation between the certainty and uncertainty domains. Our findings suggest that behavioural variations across decision environments are influenced by both platform choice sets and potential exogenous factors that may affect income and wealth after automating transactions.