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The Allocation of Time in Decision-Making

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Author Info
Christopher F. Chabris
David Laibson
Carrie L. Morris
Jonathon P. Schuldt
Dmitry Taubinsky

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Abstract

We study the allocation of time across decision problems. If a decision-maker (1) has noisy estimates of value, (2) improves those estimates the longer she analyzes a choice problem, and (3) allocates time optimally, then the decision-maker should spend less time choosing when the value gap between two options is relatively large. To test this prediction we asked subjects to make 27 binary incentive-compatible intertemporal choices, and measure response time for each decision. Our time allocation model explains 54% of the variance in average decision time. These results support the view that decision-making is a cognitively costly activity that uses time as an input allocated according to cost-benefit principles. (JEL: C0, D01, D03, D87, D9) (c) 2009 by the European Economic Association.

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/JEEA.2009.7.2-3.628
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Publisher Info
Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 7 (2009)
Issue (Month): 2-3 (04-05)
Pages: 628-637
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Handle: RePEc:tpr:jeurec:v:7:y:2009:i:2-3:p:628-637

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Find related papers by JEL classification:
C0 - Mathematical and Quantitative Methods - - General
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
D9 - Microeconomics - - Intertemporal Choice and Growth

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This page was last updated on 2009-11-16.

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