Behavioral Economics Workshop: Dmitry Taubinsky
Tuesday, March 30, 2021 11:15am to 12:45pm

About this Event
Dmitry Taubinsky, University of California, Berkeley
Provisional Title: Dynamic Preference "Reversals" and Time Inconsistency (joint w/ Philipp Strack)-No paper available.
Abstract: We study identification of time preferences in environments where an agent first makes an advance commitment (time 0), and later can revise her choices (time 1). A frequently-discussed empirical finding in such environments---often interpreted as evidence of time-inconsistent preferences---is that on average, agents exhibit a stronger preference for time 1 gratification when deciding in time 1 rather than in time 0. We establish a series of theoretical results that show that in the absence of (difficult-to-test) parametric assumptions, the only choice patterns that do in fact reject time-consistent expected utility maximization are where an agent's time 0 choice is revealed to be strictly dominated at time 1 with probability 1. Imposing quasi- or strict concavity of preferences does not aid with identification. Imposing strong parametric assumptions on the quasi-hyperbolic discounting model, such as constant relative risk aversion and multiplicative taste shocks, can only generate identified sets, which we argue are likely to be large. However, we prove that there is one class of empirical designs that does produce point-identification of time preferences: designs that elicit agents' willingness to pay for different alternatives at both time 0 and time 1, and where the marginal utility of money can be assumed to not vary with agents' time 1 preferences for the different alternatives.
In the last part of the talk, I will illustrate the theoretical results on point identification by discussing recent estimates of time inconsistency in the field settings of (i) exercise (based on work with Carrera et al.) and (ii) high-interest borrowing (based on work with Allcott et al.). The experimental designs in both contexts allow estimates of the quasi-hyperbolic discounting model, and facilitate welfare analyses of policies to counteract failures of self-control.
Event Details
Dial-In Information
If you are interested in participating in this seminar, please register at:
https://cornell.zoom.us/meeting/register/tJItc-GsqT4vHdfOB-gIVOe1Ll83Bli15860
Note: If you have previously registered for the Spring 2021 Behavioral Economics Workshop, there is no need to re-register.