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Procrastination, Self-Imposed Deadlines and Other Commitment Devices

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  • Kyle Hyndman

    ()
    (SMU)

  • Alberto Bisin

    ()
    (NYU)

Abstract

In this paper we model a decision maker who must exert costly effort to complete a single task by a fixed deadline. Effort costs evolve stochastically in continuous time. The decision maker will then optimally wait to exert effort until costs are less than a given threshold, the solution to an optimal stopping time problem. We derive the solution to this model for three cases: (1) time consistent decision makers, (2) naive hyperbolic discounters and (3) sophisticated hyperbolic discounters. Sophisticated hyperbolic discounters behave as if they were time consistent but instead have a smaller reward for completing the task. We show that sophisticated decision makers will often self-impose a deadline to ensure early completion of the task. Other forms of commitment are also discussed.

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Bibliographic Info

Paper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0904.

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Date of creation: Mar 2009
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Handle: RePEc:smu:ecowpa:0904

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Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
Phone: 214-768-2715
Fax: 214-768-1821
Web page: http://www.smu.edu/economics

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Keywords: Procrastination; hyperbolic discounting; time inconsistency;

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References

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  1. Christopher Harris & David Laibson, 2006. "Instantaneous Gratification," Levine's Bibliography 321307000000000635, UCLA Department of Economics.
  2. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
  3. Jianjun Miao, 2004. "Option Exercise with Temptation," Microeconomics 0409002, EconWPA.
  4. Maria Saez-Marti & Anna Sjögren, 2007. "Deadlines and Distractions," IEW - Working Papers 347, Institute for Empirical Research in Economics - University of Zurich.
  5. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self-Control and the Theory of Consumption," Econometrica, Econometric Society, vol. 72(1), pages 119-158, 01.
  6. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  7. W. Pesendorfer & F. Gul, 1999. "Temptation and Self-Control," Princeton Economic Theory Papers 99f1, Economics Department, Princeton University.
  8. Nicholas Burger & Gary Charness & John Lynham, 2008. "Three Field Experiments on Procrastination and Willpower," Levine's Working Paper Archive 122247000000002399, David K. Levine.
  9. Peter Carr & Robert Jarrow & Ravi Myneni, 1992. "Alternative Characterizations Of American Put Options," Mathematical Finance, Wiley Blackwell, vol. 2(2), pages 87-106.
  10. Markus K. Brunnermeier & Filippos Papakonstantinou & Jonathan A. Parker, 2008. "An Economic Model of the Planning Fallacy," NBER Working Papers 14228, National Bureau of Economic Research, Inc.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Rational procrastination
    by Economic Logician in Economic Logic on 2009-09-04 14:47:00
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Cited by:
  1. Laibson, David I. & Harris, Christopher, 2012. "Instantaneous Gratification," Scholarly Articles 9918802, Harvard University Department of Economics.
  2. Alexander K. Koch, & Julia Nafziger & Anton Suvorov & Jeroen van de Ven, 2012. "Self-Rewards and Personal Motivation," Economics Working Papers 2012-14, School of Economics and Management, University of Aarhus.
  3. Philipp Weinschenk, 2010. "Increasing Workload in a Stochastic Environment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_43, Max Planck Institute for Research on Collective Goods.
  4. Burger, Nicholas & Charness, Gary & Lynham, John, 2011. "Field and online experiments on self-control," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 393-404, March.
  5. Koch, Alexander K. & Nafziger, Julia, 2011. "Goals and Psychological Accounting," IZA Discussion Papers 5802, Institute for the Study of Labor (IZA).

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