Working Paper: NBER ID: w18734
Authors: Ned Augenblick; Muriel Niederle; Charles Sprenger
Abstract: Experimental tests of dynamically inconsistent time preferences have largely relied on choices over time-dated monetary rewards. Several recent studies have failed to find the standard patterns of time inconsistency. However, such monetary studies contain often discussed confounds. In this paper, we sidestep these confounds and investigate choices over consumption (real effort) in a longitudinal experiment. We pair those effort choices with a companion monetary discounting study. We confirm very limited time inconsistency in monetary choices. However, subjects show considerably more present bias in effort. Furthermore, present bias in the allocation of work has predictive power for demand of a meaningfully binding commitment device. Therefore our findings validate a key implication of models of dynamic inconsistency, with corresponding policy implications.
Keywords: Dynamic inconsistency; Present bias; Commitment devices; Behavioral economics
JEL Codes: C9; D12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| present bias in monetary choices (D15) | aggregate evidence of present bias (D91) |
| present bias in effort allocation (D91) | demand for commitment devices (E41) |
| present bias in effort allocation (D91) | effort allocation to sooner date (C41) |
| dynamic inconsistency in effort and money (D29) | present bias (D15) |