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Paid and hypothetical time preferences are the same: Lab, field and online evidence

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  • Pablo Brañas-Garza

    (Universidad Loyola)

  • Diego Jorrat

    (Universidad Loyola)

  • Antonio Espín

    (Universidad de Granada)

  • Angel Sánchez

    (Universidad Carlos III de Madrid)

Abstract

The use of hypothetical instead of real decision-making incentives remains under debate after decades of economic experiments. Standard incentivized experiments involve substantial monetary costs due to participants' earnings and often logistic costs as well. In time preferences experiments, which involve future payments, real payments are particularly problematic. Since immediate rewards frequently have lower transaction costs than delayed rewards in experimental tasks, among other issues, (quasi)hyperbolic functional forms cannot be accurately estimated. What if hypothetical payments provide accurate data which, moreover, avoid transaction cost problems? In this paper, we test whether the use of hypothetical - versus real - payments affects the elicitation of short-term and long-term discounting in a standard multiple price list task. One-out-of-ten participants probabilistic payment schemes are also considered. We analyze data from three studies: a lab experiment in Spain, a well-powered field experiment in Nigeria, and an online extension focused on probabilistic payments. Our results indicate that paid and hypothetical time preferences are mostly the same and, therefore, that hypothetical rewards are a good alternative to real rewards. However, our data suggest that probabilistic payments are not.

Suggested Citation

  • Pablo Brañas-Garza & Diego Jorrat & Antonio Espín & Angel Sánchez, 2021. "Paid and hypothetical time preferences are the same: Lab, field and online evidence," Working Papers 54, Red Nacional de Investigadores en Economía (RedNIE).
  • Handle: RePEc:aoz:wpaper:54
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    2. Hidalgo-Hidalgo, Marisa & Jiménez, Natalia & López-Pintado, Dunia, 2021. "Social influence and position effects," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 113-131.
    3. Prissé, Benjamin & Brañas-Garza, Pablo, 2021. "Visual Convex Time Preferences," MPRA Paper 104174, University Library of Munich, Germany.
    4. Marc Oliver Rieger & Mei Wang & Thorsten Hens, 2021. "Universal time preference," PLOS ONE, Public Library of Science, vol. 16(2), pages 1-15, February.

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    More about this item

    Keywords

    Time preferences hypothetical vs real payoffs lab field online experiments BRIS;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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