TY - JOUR
T1 - Present-bias, quasi-hyperbolic discounting, and fixed costs
AU - Benhabib, Jess
AU - Bisin, Alberto
AU - Schotter, Andrew
PY - 2010/7
Y1 - 2010/7
N2 - In this paper we elicit preferences for money-time pairs via experimental techniques. We estimate a general specification of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasi-hyperbolic discounting.We find that discount rates are high and decline with both delay and amount, as most of the previous literature. We also find clear evidence for present bias. When identifying the form of the present bias, little evidence for quasi-hyperbolic discounting is found. The data strongly favor instead a specification with a small present bias in the form of a fixed cost, of the order of $4 on average across subjects. With such a fixed cost the curvature of discounting is imprecisely estimated and both exponential and hyperbolic discounting cannot be rejected for several subjects.
AB - In this paper we elicit preferences for money-time pairs via experimental techniques. We estimate a general specification of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasi-hyperbolic discounting.We find that discount rates are high and decline with both delay and amount, as most of the previous literature. We also find clear evidence for present bias. When identifying the form of the present bias, little evidence for quasi-hyperbolic discounting is found. The data strongly favor instead a specification with a small present bias in the form of a fixed cost, of the order of $4 on average across subjects. With such a fixed cost the curvature of discounting is imprecisely estimated and both exponential and hyperbolic discounting cannot be rejected for several subjects.
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U2 - 10.1016/j.geb.2009.11.003
DO - 10.1016/j.geb.2009.11.003
M3 - Article
AN - SCOPUS:77953537341
SN - 0899-8256
VL - 69
SP - 205
EP - 223
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 2
ER -