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Corrigendum: long-term contracting with time-inconsistent agents (Econometrica, 89, 2, (793–824), 10.3982/ECTA17126)

Author

Listed:
  • Citanna, Alex
  • Gottlieb, Daniel
  • Siconolfi, Paolo
  • Zhang, Xingtan

Abstract

We study contracts between naive present-biased consumers and risk-neutral firms. We show that the welfare loss from present bias vanishes as the contracting horizon grows. This is true both when bargaining power is on the consumers’ and on the firms’ side, when consumers cannot commit to long-term contracts, and when firms do not know the consumers’ naiveté. However, the welfare loss from present bias does not vanish when firms do not know the consumers’ present bias or when they cannot offer exclusive contracts.
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Suggested Citation

  • Citanna, Alex & Gottlieb, Daniel & Siconolfi, Paolo & Zhang, Xingtan, 2023. "Corrigendum: long-term contracting with time-inconsistent agents (Econometrica, 89, 2, (793–824), 10.3982/ECTA17126)," LSE Research Online Documents on Economics 125262, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:125262
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    File URL: https://researchonline.lse.ac.uk/id/eprint/125262/
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    1. is not listed on IDEAS
    2. Buqu Gao & Liang Guo, 2025. "Optimal Contracts for Time-Inconsistent Consumers with Heterogeneous Beliefs," Management Science, INFORMS, vol. 71(1), pages 861-878, January.
    3. Acharya, Subas & Jimenez-Gomez, David & Rachinskii, Dmitrii & Rivera, Alejandro, 2026. "Present-bias and the value of sophistication: Splurging vs. smoothing," Games and Economic Behavior, Elsevier, vol. 157(C), pages 186-225.
    4. Englmaier, Florian & Fahn, Matthias & Glogowsky, Ulrich & Schwarz, Marco A., 2026. "When protection becomes exploitation: The impact of firing costs on Naïve Employees," Journal of Public Economics, Elsevier, vol. 254(C).
    5. Cetemen, Doruk & Feng, Felix Zhiyu & Urgun, Can, 2023. "Renegotiation and dynamic inconsistency: Contracting with non-exponential discounting," Journal of Economic Theory, Elsevier, vol. 208(C).
    6. Bernardus Van Doornik & Armando Gomes & David Schoenherr & Janis Skrastins, 2024. "Savings-and-Credit Contracts," Working Papers Series 610, Central Bank of Brazil, Research Department.
    7. Fahn, Matthias & Seibel, Regina, 2022. "Present bias in the labor market – when it pays to be naive," Games and Economic Behavior, Elsevier, vol. 135(C), pages 144-167.
    8. Jianfeng Zhang & Zimu Zhu, 2025. "A Dynamic Principal-Agent Problem with One-Sided Commitment," Mathematics of Operations Research, INFORMS, vol. 50(4), pages 2600-2632, November.
    9. Peter Andre & Paul Heidhues & Botond Kőszegi & Takeshi Murooka, 2026. "Procrastination and Competition Failure," ISER Discussion Paper 1315, Institute of Social and Economic Research, The University of Osaka.
    10. Heresi, José Ignacio, 2026. "Credit card interchange fees revisited: The role of credit and consumer behavior," International Journal of Industrial Organization, Elsevier, vol. 106(C).
    11. Camilo Hern'andez & Dylan Possamai, 2023. "Time-inconsistent contract theory," Papers 2303.01601, arXiv.org.
    12. Siddharth Chatterjee & Daniel F. Garrett, 2026. "Competitive Credit and Present Bias: A Stochastic Discounting Approach," Papers 2602.09728, arXiv.org.
    13. Soheil Ghili & Ben Handel & Igal Hendel & Michael D. Whinston, 2019. "Optimal Long-Term Health Insurance Contracts: Characterization, Computation, and Welfare Effects," Cowles Foundation Discussion Papers 2218R2, Cowles Foundation for Research in Economics, Yale University, revised May 2021.

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    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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