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American Economic Review Vol. 104 No. 12 2014

Present Bias and Collective Dynamic Choice in the Lab

Matthew O. Jackson1; Leeat Yariv2

1 Department of Economics, 579 Serra Mall Stanford University, Stanford, CA 94305 the Santa Fe Institute, and CIFAR; (e-mail: ) · 2 Division of the Humanities and Social Sciences, Caltech, MC 228–77 Pasadena, CA 91125 (e-mail: ).

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.

DOI
10.1257/aer.104.12.4184
Volume
104
Issue
12
Pages
4184-4204
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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