Time Consistency: Stationarity and Time Invariance
AbstractA 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. Half of the subjects are time consistent, but only two-thirds 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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Bibliographic InfoPaper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number yoram_halevy-2012-19.
Length: 31 pages
Date of creation: 24 Jun 2012
Date of revision: 24 Jun 2012
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Web page: http://www.economics.ubc.ca/
Discounting; dynamic consistency; present bias; stability;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-08 (All new papers)
- NEP-CBE-2012-07-08 (Cognitive & Behavioural Economics)
- NEP-EVO-2012-07-08 (Evolutionary Economics)
- NEP-EXP-2012-07-08 (Experimental Economics)
- NEP-HPE-2012-07-08 (History & Philosophy of Economics)
- NEP-UPT-2012-07-08 (Utility Models & Prospect Theory)
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