Working Over Time: Dynamic Inconsistency in Real Effort Tasks
AbstractExperimental 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.
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Date of creation: Jan 2013
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Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-EXP-2013-02-03 (Experimental Economics)
- NEP-HRM-2013-02-03 (Human Capital & Human Resource Management)
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