scholarly journals Identifying present bias and time preferences with an application to land-lease-contract data1

2020 ◽  
Vol 23 (3) ◽  
pp. 363-385
Author(s):  
Pieter A Gautier ◽  
Aico van Vuuren
Keyword(s):  
Credit Constraints ◽  
Time Preferences ◽  
Competitive Market ◽  
Consumption Expenditure ◽  
Bias Parameter ◽  
Present Bias ◽  
Lease Contract

Summary What can contracts—traded and priced in a competitive market and featuring a pre-specified system of future payments—teach us about time preferences and present bias? We first show that identification of present bias requires assumptions on the felicity function and that agents must have credit constraints on consumption expenditure. Moreover, when there is heterogeneity in present bias, identification requires that agents with the same present bias parameter buy houses with different contracts. We illustrate our findings with observational land-lease-contract data from Amsterdam.

Time Preferences across Language Groups: Evidence on Intertemporal Choices from the Swiss Language Border*

2021 ◽  
Author(s):  
Holger Herz ◽  
Martin Huber ◽  
Tjaša Maillard-Bjedov ◽  
Svitlana Tyahlo
Keyword(s):  
Hyperbolic Discounting ◽  
Time Preferences ◽  
Discount Factor ◽  
Socioeconomic Conditions ◽  
Measuring Time ◽  
Present Bias ◽  
Language Groups ◽  
Long Run ◽  
Intertemporal Choices

Abstract Differences in patience across language groups have recently received increased attention in the literature. We provide evidence on this issue by measuring time preferences of French and German speakers from a bilingual municipality in Switzerland where institutions are shared and socioeconomic conditions are very similar across the two language groups. We find that French speakers are significantly more impatient than German speakers, and differences are particularly pronounced when payments in the present are involved. Estimates of preference parameters of a quasi-hyperbolic discounting model suggest significant differences in both present bias (β) and the long-run discount factor (δ) across language groups.

scholarly journals Meta-Analysis of Present-Bias Estimation Using Convex Time Budgets

2019 ◽  
Author(s):  
Taisuke Imai ◽  
Tom Rutter ◽  
Colin Camerer
Keyword(s):  
Time Budget ◽  
Meta Analysis ◽  
Primary Source ◽  
Monetary Reward ◽  
Selective Reporting ◽  
Bias Parameter ◽  
Bias Estimation ◽  
Current Time ◽  
Present Bias ◽  
Time Period

We examine 220 estimates of the present-bias parameter from 28 articles using the Convex Time Budget protocol. The literature shows that people are on average present biased, but the estimates exhibit substantial heterogeneity across studies. There is evidence of modest selective reporting in the direction of overreporting present-bias. The primary source of the heterogeneity is the type of reward, either monetary or non-monetary reward, but the effect is weakened after correcting for potential selective reporting. In the studies using the monetary reward, the delay until the issue of the reward associated with the "current" time period is shown to influence the estimates of present bias parameter.

scholarly journals Present Bias and Collective Dynamic Choice in the Lab

2014 ◽  
Vol 104 (12) ◽  
pp. 4184-4204 ◽  
Author(s):  
Matthew O. Jackson ◽  
Leeat Yariv
Keyword(s):  
Time Preferences ◽  
Dynamic Choice ◽  
Time Discounting ◽  
Collective Dynamic ◽  
Present Bias ◽  
Lab Experiments ◽  
Collective Decisions ◽  
As If

We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, utilitarian aggregation necessitates a present bias. In lab experiments three quarters of “social planners” exhibited present biases, and less than two percent were time consistent. Roughly a third of subjects acted as if they were pure utilitarians, and the rest chose as if they also had varying degrees of distributional concerns. (JEL C91, D12, D71, D72)

Do Religious Reminders Help You With Your Financial Decisions?

2020 ◽  
Vol 9 (3) ◽  
pp. 42-53
Author(s):  
Orhan Erdem ◽  
Amy Martin
Keyword(s):  
Decision Making ◽  
Undergraduate Students ◽  
Time Preferences ◽  
Prosocial Behaviors ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Present Bias ◽  
Laboratory Conditions ◽  
Financial Decision ◽  
The Relationship

Although religion is shown to be associated with several prosocial behaviors, not much work has been done on the relationship with economic or financial decision-making. This study aims to fill this gap. Surveying 87 undergraduate students under controlled laboratory conditions, the authors analyzed the effect of subtle reminders of religious concepts on time preferences in relation to finances. The results of the experiments showed that reminding participants of religious themes decreased the percentage of present bias by 10.4%.

scholarly journals Risk Preferences Are Not Time Preferences: Reply

2015 ◽  
Vol 105 (7) ◽  
pp. 2287-2293 ◽  
Author(s):  
James Andreoni ◽  
Charles Sprenger
Keyword(s):  
Intertemporal Choice ◽  
Risk Preferences ◽  
Time Preferences ◽  
Present Bias ◽  
Over Time

Can the well-known experimental phenomenon of present-bias in intertemporal choice be confounded with the risks associated with receiving payment? Can measurements of risk preferences be used to represent desires for smoothness in intertemporal payments? In our two 2012 papers in this journal we explored these two questions and found the answer to the first to be yes and the second to be no. We feel the three papers inspired by our work and published here underscore these arguments and point to interesting new possibilities for modeling and measuring risk over time. (JEL C91, D81, D91)

scholarly journals Present-Biased Preferences and Credit Card Borrowing

2010 ◽  
Vol 2 (1) ◽  
pp. 193-210 ◽  
Author(s):  
Stephan Meier ◽  
Charles Sprenger
Keyword(s):  
Field Study ◽  
Credit Card ◽  
Time Preference ◽  
Credit Constraints ◽  
Credit Cards ◽  
Choice Experiments ◽  
Time Preferences ◽  
Disposable Income ◽  
Credit Card Debt ◽  
Tax Returns

Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints. (JEL D12, D14, D91)

scholarly journals Credit Constraints and the Measurement of Time Preferences

2020 ◽  
pp. 1-17 ◽  
Author(s):  
Mark Dean ◽  
Anja Sautmann
Keyword(s):  
Developing Countries ◽  
Risk Sharing ◽  
Credit Constraints ◽  
Time Preferences ◽  
Financial Shocks ◽  
Test Models ◽  
Using Data

Incentivized experiments are often used to identify the time preferences of households in developing countries. We argue theoretically and empirically that experimental measures may not identify preference parameters, but are a useful tool for understanding financial shocks and constraints. Using data from an experiment in Mali, we find that subject responses vary with savings and financial shocks, meaning they provide information about credit constraints and can be used to test models of risk sharing.

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