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Read This Paper Even Later: Procrastination with Time-Inconsistent Preferences

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  • Fischer, Carolyn

    ()
    (Resources for the Future)

Abstract

Salience costs, along with imperfect foresight, have been used in previous studies to explain procrastination of a one-time task. A companion to this paper, "Read This Paper Later: Procrastination with Time-Consistent Preferences" analyzes the extent to which procrastination of a divisible task is compatible with rational behavior. While the fully rational model explains key qualitative observations, it requires an extremely high rate of time preference or elasticity of intertemporal substitution to generate serious procrastination and cannot explain undesired procrastination at all. This paper investigates the extent to which dynamically inconsistent preferences can better explain such impatience and address the issue of self-control failures. Two types of discount functions are presented, motivated by previous salience cost explanations. Hyperbolic discounting corresponds to a salient present; short-term discount rates are higher than long-term ones. A new form, differential discounting, arises from salient costs; utility from leisure is discounted at a higher rate than rewards from work. The model of a divisible task with delayed rewards generates clear predictions that can be used to distinguish between types. When workers have rational expectations about future behavior, both regimes induce self-control problems and sharper procrastination than standard exponential discounting. However, they have different implications for policies to induce work, reduce procrastination, and improve welfare.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-99-20.

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Date of creation: 01 Jan 1999
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Handle: RePEc:rff:dpaper:dp-99-20

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  1. Fischer, Carolyn, 2001. "Read this paper later: procrastination with time-consistent preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 46(3), pages 249-269, November.
  2. Martin Luckert & Wiktor Adamowicz, 1993. "Empirical measures of factors affecting social rates of discount," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(1), pages 1-21, February.
  3. Laitner, John P., 1980. "Intergenerational preference differences and optimal national saving," Journal of Economic Theory, Elsevier, vol. 22(1), pages 56-66, February.
  4. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
  5. Schelling, Thomas C, 1984. "Self-Command in Practice, in Policy, and in a Theory of Rational Choice," American Economic Review, American Economic Association, vol. 74(2), pages 1-11, May.
  6. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
  7. 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.
  8. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
  9. Schelling, Thomas C, 1978. "Egonomics, or the Art of Self-Management," American Economic Review, American Economic Association, vol. 68(2), pages 290-94, May.
  10. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
  11. Peleg, Bezalel & Yaari, Menahem E, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Wiley Blackwell, vol. 40(3), pages 391-401, July.
  12. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
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