Present bias and collective dynamic choice in the lab

Publication Year
2014

Type

Journal Article
Abstract
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)
Journal
American economic review
Volume
104
Issue
12
Pages
- 4204
Date Published
Dec 2014
ISBN
0002-8282, 0002-8282