American Economic Review Vol. 89 No. 1 1999
Doing It Now or Later
Abstract
We examine self-control problems—modeled as time-inconsistent, present-biased preferences—in a model where a person must do an activity exactly once. We emphasize two distinctions: Do activities involve immediate costs or immediate rewards, and are people sophisticated or naive about future self-control problems? Naive people procrastinate immediate-cost activities and preproperate—do too soon—immediate-reward activities. Sophistication mitigates procrastination, but exacerbates preproperation. Moreover, with immediate costs, a small present bias can severely harm only naive people, whereas with immediate rewards it can severely harm only sophisticated people. Lessons for savings, addiction, and elsewhere are discussed.
- DOI
- 10.1257/aer.89.1.103
- Volume
- 89
- Issue
- 1
- Pages
- 103-124
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref