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Pre-Commitment and Flexibility in a Time Decision Experiment

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Author Info
Casari, Marco

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Abstract

This study presents experimental data on pre-commitment and flexibility where monetary rewards are delivered with an actual delay. Preference for pre-commitment is defined as willingness to pay a cost to restrict the size of the choice set available in the future. Preference for flexibility is defined as willingness to pay a cost to enlarge the choice set available in the future. The existing empirical evidence about these phenomena is rather limited. On the other hand, models of intertemporal choice differ widely on these issues, with some predicting only demand for pre-commitment, others only demand for flexibility, while others neither one. We find that two-thirds of the subjects cannot be accounted for with the canonical exponential discounting model and that there is demand for both pre-commitment and flexibility.

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Publisher Info
Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1183.

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Length: 36 pages
Date of creation: Mar 2006
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Handle: RePEc:pur:prukra:1183

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Related research
Keywords: experiments ; time preferences ; time inconsistency ; preference for commitment ; preference for flexibility ; discounting;

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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