Present bias and collective dynamic choice in the lab

TitlePresent bias and collective dynamic choice in the lab
Publication TypeJournal Article
Year of Publication2014
AuthorsJackson MO, Yariv L
JournalAmerican economic review
Pagination - 4204
Date PublishedDec 2014
ISBN Number0002-8282, 0002-8282
KeywordsBias, Decision making, Economic analysis, Economic behaviour, Economic dynamics, Economics, Utilitarianism
AbstractWe 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)