Read This Paper Even Later: Procrastination with Time-Inconsistent Preferences
Salience costs, along with imperfect foresight, have been used in previous studies to explain procrastination of a one-time task. A companion to this paper, "Read This Paper Later: Procrastination with Time-Consistent Preferences" analyzes the extent to which procrastination of a divisible task is compatible with rational behavior. While the fully rational model explains key qualitative observations, it requires an extremely high rate of time preference or elasticity of intertemporal substitution to generate serious procrastination and cannot explain undesired procrastination at all. This paper investigates the extent to which dynamically inconsistent preferences can better explain such impatience and address the issue of self-control failures. Two types of discount functions are presented, motivated by previous salience cost explanations. Hyperbolic discounting corresponds to a salient present; short-term discount rates are higher than long-term ones. A new form, differential discounting, arises from salient costs; utility from leisure is discounted at a higher rate than rewards from work. The model of a divisible task with delayed rewards generates clear predictions that can be used to distinguish between types. When workers have rational expectations about future behavior, both regimes induce self-control problems and sharper procrastination than standard exponential discounting. However, they have different implications for policies to induce work, reduce procrastination, and improve welfare.
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