University of Maryland
Institutional Affiliation: University of Maryland
NBER Working Papers and Publications
|June 2017||How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments|
with Johannes Haushofer, Pamela Jakiela: w23558
Empirically observed intertemporal choices about money have long been thought to exhibit present bias, i.e. higher short-term compared to long-term discount rates. Recently, this view has been called into question on both empirical and theoretical grounds, and a spate of recent findings suggest that present bias for money is minimal or non-existent when one allows for curvature in the utility function and transaction costs are tightly controlled. However, an alternative interpretation of many of these findings is that, in the interest of equalizing transaction costs across earlier and later payments, small delays were introduced between the time of the experiment and the soonest payment. We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from...