Working Paper: NBER ID: w16438
Authors: Hanming Fang; Yang Wang
Abstract: We extend the semi-parametric estimation method for dynamic discrete choice models using Hotz and Miller's (1993) conditional choice probability (CCP) approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We illustrate the proposed estimation method with an empirical application of adult women's decisions to undertake mammography to evaluate the importance of present bias and naivety in the under-utilization of this preventive health care. Our results show evidence for both present bias and naivety.
Keywords: dynamic discrete choice; hyperbolic discounting; mammography decisions; present bias; naivety
JEL Codes: C14; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Present Bias (D15) | Decision to undertake Mammography (D91) |
| Naivety (D83) | Decision to undertake Mammography (D91) |
| Present Bias (D15) | Underutilization of Mammography (I13) |
| Naivety (D83) | Underutilization of Mammography (I13) |
| Present Bias and Naivety (D91) | Underutilization of Mammography (I13) |