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Time Consistency: Stationarity and Time Invariance

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  • Halevy, Yoram

Abstract

A sequence of experiments documents static and dynamic ``preference reversals'' between sooner-smaller and later-larger rewards, when the sooner reward could be immediate. The theoretically-motivated design permits separate identification of time-consistent, stationary and time-invariant choices. At least half of the subjects are time consistent, but only three-quarters of them exhibit stationary choices. About half of subjects with time inconsistent choices have stationary preferences. These results challenge the view that present-bias preferences are the main source of time inconsistent choices.

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File URL: http://faculty.arts.ubc.ca/yhalevy/stationarity.pdf
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Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number yoram_halevy-2012-19.

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Length: 31 pages
Date of creation: 24 Jun 2012
Date of revision: 10 Sep 2014
Publication status: Forthcoming in Econometrica
Handle: RePEc:ubc:pmicro:yoram_halevy-2012-19

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Web page: http://www.economics.ubc.ca/

Related research

Keywords: Discounting; dynamic consistency; present bias; stability;

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References

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Cited by:
  1. Laurent Denant-Boèmont & Enrico Diecidue & Olivier L'Haridon, 2013. "Patience and Time Consistency in Collective Decisions," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201329, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  2. Mark Dean & Anja Sautmann, 2014. "Credit Constraints and the Measurement of Time Preferences," Working Papers 2014-1, Brown University, Department of Economics.

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