Procrastination, self-imposed deadlines and other commitment devices
In this paper we model a decision maker who must exert costly eﬀort to complete a single task by a ﬁxed deadline. Eﬀort costs evolve stochastically in continuous time. The decision maker will then optimally wait to exert eﬀort until costs are less than a given threshold, the solution to an optimal stopping time problem. We derive the solution to this model for three cases: (1) time consistent decision makers, (2) naıve hyperbolic discounters and (3) sophisticated hyperbolic discounters. Sophisticated hyperbolic discounters behave as if they were time consistent but instead have a smaller reward for completing the task. We show that sophisticated decision makers will often self-impose a deadline to ensure early completion of the task. Other forms of commitment are also discussed.
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