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Time Consistency: Stationarity and Time Invariance

  • Halevy, Yoram

A sequence of experiments documents static and dynamic ``preference reversals'' between sooner-smaller and later-larger rewards, when the sooner reward could be immediate. The theoretically-motivated design permits separate identification of time-consistent, stationary and time-invariant choices. At least half of the subjects are time consistent, but only three-quarters of them exhibit stationary choices. About half of subjects with time inconsistent choices have stationary preferences. These results challenge the view that present-bias preferences are the main source of time inconsistent choices.

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File URL: http://faculty.arts.ubc.ca/yhalevy/stationarity.pdf
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Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number yoram_halevy-2012-19.

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Length: 31 pages
Date of creation: 24 Jun 2012
Date of revision: 10 Sep 2014
Publication status: Forthcoming in Econometrica
Handle: RePEc:ubc:pmicro:yoram_halevy-2012-19
Contact details of provider: Web page: http://www.economics.ubc.ca/

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  10. Halevy, Yoram, 2004. "Diminishing Impatience: Disentangling Time Preference from Uncertain Lifetime," Microeconomics.ca working papers halevy-04-10-29-09-59-47, Vancouver School of Economics, revised 25 Feb 2014.
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