American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Identifying Present Bias from the Timing of Choices
American Economic Review
vol. 111,
no. 8, August 2021
(pp. 2594–2622)
Abstract
A (partially naive) quasi-hyperbolic discounter repeatedly chooses whether to complete a task. Her net benefits of task completion are drawn independently between periods from a time-invariant distribution. We show that the probability of completing the task conditional on not having done so earlier increases towards the deadline. Conversely, we establish nonidentifiability by proving that for any time-preference parameters and any dataset with such (weakly increasing) task-completion probabilities, there exists a stationary payoff distribution that rationalizes the agent's behavior if she is either sophisticated or fully naive. Additionally, we provide sharp partial identification for the case of observable continuation values.Citation
Heidhues, Paul, and Philipp Strack. 2021. "Identifying Present Bias from the Timing of Choices." American Economic Review, 111 (8): 2594–2622. DOI: 10.1257/aer.20191258Additional Materials
JEL Classification
- C14 Semiparametric and Nonparametric Methods: General
- D11 Consumer Economics: Theory
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- D90 Micro-Based Behavioral Economics: General
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making