Present Bias and Collective Dynamic Choice in the Lab
American Economic Review
vol. 104,
no. 12, December 2014
(pp. 4184-4204)
Abstract
We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, utilitarian aggregation necessitates a present bias. In lab experiments three quarters of "social planners" exhibited present biases, and less than two percent were time consistent. Roughly a third of subjects acted as if they were pure utilitarians, and the rest chose as if they also had varying degrees of distributional concerns. (JEL C91, D12, D71, D72)Citation
Jackson, Matthew O., and Leeat Yariv. 2014. "Present Bias and Collective Dynamic Choice in the Lab." American Economic Review, 104 (12): 4184-4204. DOI: 10.1257/aer.104.12.4184Additional Materials
JEL Classification
- C91 Design of Experiments: Laboratory, Individual
- D12 Consumer Economics: Empirical Analysis
- D71 Social Choice; Clubs; Committees; Associations
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior