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How soon is now? Evidence of present bias from convex time budget experiments

Author

Listed:
  • Uttara Balakrishnan

    (IMPAQ International)

  • Johannes Haushofer

    (Princeton University
    Busara Center for Behavioral Economics)

  • Pamela Jakiela

    (Center for Global Development)

Abstract

We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from 494 participants, using convex time budgets and tightly controlling for transaction costs. Using the Kenyan mobile money system M-Pesa to make real-time transfers to subjects’ phones , we vary whether same-day payments are made immediately after the experimental session or at the close of the business day. We find strong evidence of present bias, with estimates of the present bias parameter ranging from 0.902 to 0.924—but only when same-day payments are made immediately after the experiment.

Suggested Citation

  • Uttara Balakrishnan & Johannes Haushofer & Pamela Jakiela, 2020. "How soon is now? Evidence of present bias from convex time budget experiments," Experimental Economics, Springer;Economic Science Association, vol. 23(2), pages 294-321, June.
  • Handle: RePEc:kap:expeco:v:23:y:2020:i:2:d:10.1007_s10683-019-09617-y
    DOI: 10.1007/s10683-019-09617-y
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    More about this item

    Keywords

    Discount rate; Present bias; Experiment; Mobile money;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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