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 Discounting Behavior in Problem Gambling

2021 ◽  
Author(s):  
Patrick Ring ◽  
Catharina C. Probst ◽  
Levent Neyse ◽  
Stephan Wolff ◽  
Christian Kaernbach ◽  
...  
Keyword(s):  
Problem Gambling ◽  
Intertemporal Choice ◽  
Model Problem ◽  
Treatment Options ◽  
Hyperbolic Discounting ◽  
The Other ◽  
Discount Factor ◽  
Problem Gamblers ◽  
Present Bias ◽  
Long Run

AbstractProblem gamblers discount delayed rewards more rapidly than do non-gambling controls. Understanding this impulsivity is important for developing treatment options. In this article, we seek to make two contributions: First, we ask which of the currently debated economic models of intertemporal choice (exponential versus hyperbolic versus quasi-hyperbolic) provides the best description of gamblers’ discounting behavior. Second, we ask how problem gamblers differ from habitual gamblers and non-gambling controls within the most favored parametrization. Our analysis reveals that the quasi-hyperbolic discounting model is strongly favored over the other two parametrizations. Within the quasi-hyperbolic discounting model, problem gamblers have both a significantly stronger present bias and a smaller long-run discount factor, which suggests that gamblers’ impulsivity has two distinct sources.

Individual time preferences and obesity

2019 ◽  
Vol 47 (1) ◽  
pp. 16-26 ◽  
Author(s):  
Moslem Soofi ◽  
Ali Akbari Sari ◽  
Satar Rezaei ◽  
Mohammad Hajizadeh ◽  
Farid Najafi
Keyword(s):  
Adult Population ◽  
Hyperbolic Discounting ◽  
Time Preferences ◽  
Probit Regression ◽  
Content Type ◽  
Percentage Points ◽  
Long Run ◽  
Health Related ◽  
Time Inconsistent ◽  
High Level

Purpose Behavioral economic analysis of health-related behavior is a potentially useful approach to study and control non-communicable diseases. The purpose of this paper is to explore the time preferences of individuals and its impact on obesity in an adult population of Iran. Design/methodology/approach A structured questionnaire was completed by 792 individuals who were randomly selected from the participants of an ongoing national Prospective Epidemiological Research Studies in IrAN cohort study in West of Iran. The quasi-hyperbolic discounting model was used to estimate the parameters of time preferences and a probit regression model was used to explore the correlation between obesity and time preferences. Findings There was a statistically significant correlation between obesity and both the long-run patience and present-biased preferences of participants. Individuals with a low level of long-run patience were 10.2 percentage points more likely to be obese compared to individuals with a high level of long-run patience. The probability of being obese increased by 11 percentage points in present-biased individuals compared to future biased individuals. Originality/value The long-run patience and time inconsistent preferences were significant determinants of obesity. Considering the time-inconsistent preferences in the development of policies to change obesity-related behavior among adults might increase the success rate of the interventions.

Measuring Time Preferences in Large Surveys

2019 ◽  
Author(s):  
Michael M. Bechtel ◽  
Amalie Sofie Jensen ◽  
Kenneth F. Scheve
Keyword(s):  
Time Preferences ◽  
Measuring Time

scholarly journals Nonparametric Analysis of Time-Inconsistent Preferences

2021 ◽  
Author(s):  
Laura Blow ◽  
Martin Browning ◽  
Ian Crawford
Keyword(s):  
Sufficient Conditions ◽  
Revealed Preference ◽  
Hyperbolic Discounting ◽  
Time Preferences ◽  
Hyperbolic Model ◽  
Nonparametric Analysis ◽  
Time Horizons ◽  
Time Inconsistent ◽  
Using Data ◽  
Necessary And Sufficient

Abstract This paper provides a revealed preference characterisation of quasi-hyperbolic discounting which is designed to be applied to readily-available expenditure surveys. We describe necessary and sufficient conditions for the leading forms of the model and also study the consequences of the restrictions on preferences popularly used in empirical lifecycle consumption models. Using data from a household consumption panel dataset we explore the prevalence of time-inconsistent behaviour. The quasi-hyperbolic model provides a significantly more successful account of behaviour than the alternatives considered. We estimate the joint distribution of time preferences and the distribution of discount functions at various time horizons.

scholarly journals Resolving Time Inconsistency of Decision Problem with Non-expectation Operator: From Internal Conflict to Internal Harmony by Strategy of Self-Coordination

2020 ◽  
Author(s):  
Xiangyu Cui ◽  
Duan Li ◽  
Yun Shi
Keyword(s):  
Decision Maker ◽  
Decision Problem ◽  
Hyperbolic Discounting ◽  
Time Inconsistency ◽  
Internal Conflict ◽  
Equilibrium Strategy ◽  
Game Model ◽  
Long Run ◽  
Short Run ◽  
Time Inconsistent

When a stochastic decision problem is time inconsistent, the decision maker would be puzzled by his conflicting decisions optimally derived from his time-varying preferences at different time instants (with different time horizons). While the long-run self (LR) of the decision maker pursues the long-term optimality, the short-run selves (SRs) of the decision maker at different time instants bow to short-term temptations. While the literature began to recognize the importance to strike a balance between LR's and SRs' interests, the existing results are not applicable to situations where the decision maker's preferences involve non-expectation operators. We propose an operable unified two-tier dual-self game model with commitment by punishment, which can cope with general time inconsistent stochastic decision problems with both expectation and non-expectation operators in the objective function. By attaching punishment terms to both the preferences of LR and SRs which quantitatively evaluate the internal conflict among different selves, our game model aligns the interests of the LR and SRs to a certain degree. The equilibrium strategy, termed strategy of self-coordination, achieves some degree of internal harmony among various selves. We successfully apply the model to the investment and consumption problem with quasi-hyperbolic discounting and the dynamic mean-variance portfolio selection problem.

scholarly journals On Measuring Time Preferences

2013 ◽  
Author(s):  
James Andreoni ◽  
Michael Kuhn ◽  
Charles Sprenger
Keyword(s):  
Time Preferences ◽  
Measuring Time

Do Time Preferences Matter in Intertemporal Consumption and Portfolio Decisions?

2019 ◽  
Vol 19 (2) ◽  
Author(s):  
Shou Chen ◽  
Shengpeng Xiang ◽  
Hongbo He
Keyword(s):  
Absolute Risk ◽  
Hyperbolic Discounting ◽  
Time Preferences ◽  
Hjb Equations ◽  
Portfolio Decisions ◽  
Special Cases ◽  
Intertemporal Consumption ◽  
Hamilton Jacobi Bellman ◽  
Hara Utility ◽  
Exponential Discounting

Abstract We study the intertemporal consumption and portfolio rules in the model with the general hyperbolic absolute risk aversion (HARA) utility. The equivalent approximation approach is employed to obtain the Hamilton-Jacobi-Bellman (HJB) equations, and a remarkable property is shown: portfolio rules are independent of the discount function. Moreover, both the consumption and portfolio rates are non-increasing functions of wealth. Particularly illustrative cases examined in detail are the models with the most adopted discount functions, including exponential discounting and hyperbolic discounting. Explicit solutions for intertemporal decisions are found for these special cases, revealing that individual’s time preferences affect the consumption rules only. Moreover, the time-consistent consumption rate under hyperbolic discounting is larger than its counterpart under exponential discounting.

A comparative computational and behavioral analysis of real estate performance

2017 ◽  
Vol 35 (3) ◽  
pp. 290-320 ◽  
Author(s):  
James R. DeLisle ◽  
Terry V. Grissom
Keyword(s):  
Asset Pricing ◽  
Financial Crisis ◽  
Real Estate ◽  
State Space ◽  
Hyperbolic Discounting ◽  
Time Preferences ◽  
Content Type ◽  
Agent Behavior ◽  
Market State

Purpose The purpose of this paper is to investigate changes in the commercial real estate market dynamics as a function of and conditional to the shifts in market state-space environment that can influence agent responses. Design/methodology/approach The analytical design uses a comparative computational experiment to address the performance of property assets in the current market based on comparison with prior structural patterns. The latent variables developed across market sectors are used to test agent behavior contingent on the perspectives of capital asset pricing conditionals (CAPM) and a behavioral momentum/herd construct. The state-space momentum analysis can assist the comparative analysis of current levels and shifts in property asset performance given the issues that have arisen with the financial crisis of 2007-2009. Findings An analytic approach is employed framed by a situation-dependent model. This frame considers risk profiles characterizing the perspectives and preferences guiding a delineated market state. This perspective is concerned with the possibility of shifts in market momentum and representativeness conditioning investor expectations. It is observed that the current market (post-crisis) has changed significantly from the prior operations (despite the diversity observed in prior market states). The dynamics of initial findings required an additional test anchored to the performance of the general capital market and the real economy across time. This context supports the use of a modified CAPM model allowing the consideration of opportunity cost in a space-time dynamic anchored with the consideration of equity, debt, riskless asset and liquidity options as they varied for the representative agents operating per market state. Research limitations/implications This paper integrates neoclassical and behavioral economic constructs. Combines asset pricing with prospect theory and allows the calculation of endogenous time-preferences, risk attitudes and formulation and testing of hyperbolic discounting functions. Practical implications The research shows that market structure and agent behavior since the financial crisis has changed from the investment and valuation perspectives operating as observed and measured from 1970 up to 2007. In contradiction to the long-term findings of Reinhart and Rogoff (2008), but in compliance with common perspectives and decision heuristics often employed by investors, this time things have changed! Discounting and expected rates of return are dynamic and are hyperbolic and not constant. Returns and investment for property assets are situational (market state-space specific) and offer a distinct asset class, not appropriately estimated by many of the traditional financial models. Social implications Assist in supporting insights to measure in errors and equations that result in inefficient resource allocation and beta discounting that supports the financial crisis created by assets subject to long-term decision needs (delta function). Originality/value The paper offers a combination and comparison of neoclassic asset pricing using a modified CAPM (two-pass) approach within the structural frame of Kahneman and Tversky’s (1979) prospect theory. This technique allows the consideration of the effects of present bias, beta-delta functions and the operation of the Allais Paradox in market states that are characterized by gains and losses and thus risk aversion and risk seeking behavior. This ability for differentiation allows for the development of endogenous time-preferences and hyperbolic discounting factors characteristic of commercial property investment.

Optimal Retirement Policies with Present-Biased Agents

2020 ◽  
Author(s):  
Pei Cheng Yu
Keyword(s):  
Private Information ◽  
Hyperbolic Discounting ◽  
Time Inconsistency ◽  
Retirement Savings ◽  
Present Bias ◽  
Optimal Mechanism ◽  
Savings Accounts ◽  
The Government ◽  
Social Security Benefits ◽  
Retirement Policies

Abstract This paper incorporates quasi–hyperbolic discounting into a Mirrlees taxation model to study the design of retirement policies for present-biased agents. I show that the government can improve the screening of productivity by exploiting time inconsistency. This is done by providing commitment to sophisticated agents and taking advantage of the incorrect beliefs of naïve agents. This can be achieved even if the degrees of present bias and sophistication are private information. I also demonstrate how the government can implement the optimal mechanism using retirement savings accounts and social security benefits.

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