Self-Control in the Face of Multiple Projects

Problem definition : We study how people with present bias make choices when they face multiple projects. Each project consists of a starting and a finishing stage, both requiring costly effort to complete but yield rewards only after project completion. Methodology/results : We derive people’s perception-perfect strategies for project scheduling. Naifs may start a project, but never finish it. They may multitask; that is, start a new project before finishing an old project. They may not prioritize projects by NPV. Sophisticates do not start a project but not finish it. However, like naifs, they may multitask and not prioritize projects by NPV. What happens if people can choose the cost structure endogenously? If people multitask when the cost structure is exogenously given, then when the cost structure can be chosen by them, naifs delay the costs to the finishing stages as much as possible, resulting in either multitasking or procrastination. If, in addition, the project with a higher NPV has a lower total cost, then naifs prioritize projects by NPV. Sophisticates, however, may not always delay the costs to finishing stages when given a choice because delaying the costs may lead to multitasking, which decreases the utility and they, unlike naifs, are fully aware of. Therefore, under endogenous cost structure, sophisticates may or may not multitask or prioritize projects by NPV. Managerial implications : Enhancing individuals’ awareness of their present bias makes them less likely to behave sub-optimally. Increasing load can also, though not always, alleviate procrastination and reduce the possibility of multitasking and not prioritizing projects based on NPV. When project portfolios are predetermined, increasing awareness of present bias always improves people’s long-run utility. However, when project portfolios are selected endogenously, sophistication does not always pay because naifs may either complete more projects or complete a more profitable project than sophisticates.