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) naive 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.
|Date of creation:||Mar 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.smu.edu/economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jianjun Miao, 2004.
"Option Exercise with Temptation,"
- Junjian Miao, 2005. "Option Exercise with Temptation," Boston University - Department of Economics - Working Papers Series WP2005-007, Boston University - Department of Economics.
- Laibson, David I. & Harris, Christopher, 2012.
9918802, Harvard University Department of Economics.
- Christopher Harris & David Laibson, 2001. "Instantaneous Gratification," Levine's Working Paper Archive 625018000000000267, David K. Levine.
- Christopher Harris & David Laibson, 2006. "Instantaneous Gratification," Levine's Bibliography 321307000000000635, UCLA Department of Economics.
- Christopher Harris & David Laibson, 2001. "Instantaneous Gratification," NajEcon Working Paper Reviews 625018000000000267, www.najecon.org.
- Nicholas Burger & Gary Charness & John Lynham, 2008. "Three Field Experiments on Procrastination and Willpower," Levine's Working Paper Archive 122247000000002399, David K. Levine.
- Faruk Gul & Wolfgang Pesendorfer, 2004.
"Self-Control and the Theory of Consumption,"
Econometric Society, vol. 72(1), pages 119-158, 01.
- Saez-Marti, Maria & Sjögren, Anna, 2008.
"Deadlines and distractions,"
Journal of Economic Theory,
Elsevier, vol. 143(1), pages 153-176, November.
- Saez-Marti, Maria & Sjögren, Anna, 2004. "Deadlines and Distractions," Working Paper Series 618, Research Institute of Industrial Economics, revised 01 Jul 2004.
- Maria Saez-Marti & Anna Sjögren, 2007. "Deadlines and Distractions," IEW - Working Papers 347, Institute for Empirical Research in Economics - University of Zurich.
- Ted O'Donoghue and Matthew Rabin ., 1997.
"Doing It Now or Later,"
Economics Working Papers
97-253, University of California at Berkeley.
- Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- W. Pesendorfer & F. Gul, 1999.
"Temptation and Self-Control,"
Princeton Economic Theory Papers
99f1, Economics Department, Princeton University.
- Peter Carr & Robert Jarrow & Ravi Myneni, 1992. "Alternative Characterizations Of American Put Options," Mathematical Finance, Wiley Blackwell, vol. 2(2), pages 87-106.
- Laibson, David, 1997.
"Golden Eggs and Hyperbolic Discounting,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(2), pages 443-77, May.
- Markus K. Brunnermeier & Filippos Papakonstantinou & Jonathan A. Parker, 2008. "An Economic Model of the Planning Fallacy," NBER Working Papers 14228, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:smu:ecowpa:0904. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bo Chen)
If references are entirely missing, you can add them using this form.