Estimating Present Bias and Sophistication over Effort and Money

Claudia Cerrone, Anujit Chakraborty, Hyok Jung Kim and Leonhard Lades
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Leonhard Lades: Department of Economics, University of California Davis

No 359, Working Papers from University of California, Davis, Department of Economics

Abstract: We use a real-effort experiment to jointly estimate present bias (β) and sophistication (̂ β) parameters, separately over money (βm, ̂ βm) and effort (βe, ̂ βe). Our novel incentive structure aligns the choice scenario with the canonical assumption of choices being the interior optima of a concave utility-maximization exercise. Participants choose to (and predict to) complete 14% (and 10%) fewer tasks on the same day than on a future day, leading to an estimated βe between 0.70 and .79 (and ̂ βe between 0.80 and .88). We find no evidence of present bias or sophistication over money

Keywords: present bias; sophistication; beliefs; experiment; real effort task; experiment (search for similar items in EconPapers)
Date: 2023-11-06
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-lma and nep-upt
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