A rational foundation of procrastination

Joosung Lee, Daniel Li

Research output: Contribution to conferencePaperpeer-review

Abstract

In a framework of finite sequential search, we define and characterize a decision maker's time preference, which is endogenous to her optimal search decisions. The induced time preference is non-stationary and context-dependent, which support key empirical and experimental evidence, such as procrastination (i.e., the discount factor is increasing over time) and wealth effect (i.e., poor people tend to discount more). We further identify cost effect and encouragement effect, to provide insights into how the decision-maker's environment and ability relate to her time preference. Calibration results show that our endogenous time preference fits better to the quasi-hyperbolic discount model than the hyperbolic or exponential model.
Original languageEnglish
Publication statusPublished - 9 Mar 2019
EventGame Theory and Business Applications: in Honour of Professor Kalyan Chatterjee - University of Edinburgh
Duration: 8 Mar 20199 Mar 2019
https://sites.google.com/view/kc65/

Conference

ConferenceGame Theory and Business Applications
Period8/03/199/03/19
Internet address

Keywords

  • non-stationary time preference
  • context-dependent time preference
  • procrastination
  • wealth effect
  • (quasi-)hyperbolic discounting

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