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On Rush and Procrastination

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  • Brocas, Isabelle
  • Carrillo, Juan D
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    Abstract

    We analyze the decision of individuals with time inconsistent preferences who undertake irreversible activities yielding either a current cost and a future benefit or a current benefit and a future cost. We first show that, when benefits come earlier than costs, the individual faces a coordination problem with himself that results in multiple, rankable equilibria. Some of these equilibria may exhibit rush, in the sense that the activity is undertaken 'too early' (i.e. with a negative payoff). Multiplicity explains why individuals succeed or not in avoiding temptations, depending on 'the degree of trust in their future decision'. Second, we prove that competition between agents for the same activity can be beneficial for them both when costs come before and after benefits: it decreases the agents' incentives to procrastinate (i.e. to undertake the activity 'too late') in the former case and to rush in the latter. Last, complementarity of tasks exacerbates the tendency to rush and to procrastinate. Under procrastination, it may even imply that projects which are valuable for all agents are never undertaken.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2237.

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    Date of creation: Sep 1999
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    Handle: RePEc:cpr:ceprdp:2237

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    Related research

    Keywords: Decision Makiing Under Uncertainty; Procrastination; Rush; Time Inconsistency;

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    References

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    1. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
    2. Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May.
    3. Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
    4. Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
    5. Brocas, Isabelle & Carrillo, Juan D, 1999. "Entry Mistakes, Entrepreneurial Boldness and Optimism," CEPR Discussion Papers 2213, C.E.P.R. Discussion Papers.
    6. Rook, Dennis W, 1987. " The Buying Impulse," Journal of Consumer Research, University of Chicago Press, vol. 14(2), pages 189-99, September.
    7. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    8. Carrillo, Juan D & Mariotti, Thomas, 2000. "Strategic Ignorance as a Self-Disciplining Device," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 529-44, July.
    9. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
    10. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
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    Cited by:
    1. Volker Nocke & Martin Peitz, 2002. "Hyperbolic Discounting and Secondary Markets," Economics Series Working Papers 2001-W17, University of Oxford, Department of Economics.
    2. Caillaud, B. & Jullien, B., 1999. "Modelling Time Inconsistent Preferences," Papers 99.521, Toulouse - GREMAQ.
    3. Brocas, Isabelle & Carrillo, Juan D., 2000. "The value of information when preferences are dynamically inconsistent," European Economic Review, Elsevier, vol. 44(4-6), pages 1104-1115, May.

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