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The Allocation of Time in Decision-Making

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

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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Bibliographic 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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  1. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2005. "Information Acquisition: Experimental Analysis of a Boundedly Rational Model," Levine's Bibliography 666156000000000480, UCLA Department of Economics.
  2. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
  3. Christopher F. Chabris & David Laibson & Carrie L. Morris & Jonathon P. Schuldt & Dmitry Taubinsky, 2008. "Measuring intertemporal preferences using response times," NBER Working Papers 14353, National Bureau of Economic Research, Inc.
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Cited by:
  1. Dziewulski, Pawel, 2014. "Revealed time-preference," MPRA Paper 56596, University Library of Munich, Germany.
  2. Ariel Rubenstein, 2013. "Response time and decision making: An experimental study," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(5), pages 540-551, September.
  3. Sacha Bourgeois-Gironde & Itzhak Aharon, 2011. "From Neuroeconomics to Genetics: The Intertemporal Choices Case as an Example," Post-Print ijn_00713466, HAL.

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