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transaction cost and Time inconsistency in consumption- Savings behavior(experimental approach) (in Persian)

Author

Listed:
  • Tashakkori Saleh, Parvin

    (Ferdowsi University of Mashhad)

  • Khodaparast Mashhadi, Mehdi

    (Ferdowsi University of Mashhad)

  • Feizi, Mehdi

    (Ferdowsi University of Mashhad)

Abstract

Empirical and experimental studies demonstrate that the rates of time preferences are smaller in long run in comparison with that of short run. In other word individuals are present bias; and it is one of the reasons that the saving is less than its optimal level. The aim of this study is to examine if the dearth of sufficient information results in time inconsistency in individual decisions for consuming and saving or not; Thus, individuals are faced with time-inconsistency. In order to test this hypothesis, an experimental method was used. Today, different experimental methods are used to measure these preferences. In this study, individuals` time-preference parameters were measured through two common methods; "Convex Time Budget" assuming a "Constant Relative Risk Aversion" utility function and "Multiple Price List", assuming linear utility function; the results were compared thereafter. The results show that in Convex Time Budget (compared to Multiple Price List), individuals show less present-bias. Also, in both methods, individuals that receive deficient information about the time are turn of payments and faced with more time-inconsistency.

Suggested Citation

  • Tashakkori Saleh, Parvin & Khodaparast Mashhadi, Mehdi & Feizi, Mehdi, 2017. "transaction cost and Time inconsistency in consumption- Savings behavior(experimental approach) (in Persian)," The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی Ùˆ بودجه), Institute for Management and Planning studies, vol. 22(3), pages 85-108, December.
    • Handle: RePEc:auv:jipbud:v:22:y:2017:i:3:p:85-108
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