Download This PaperA Rational Foundation of Procrastination: A Theory of Non-stationary Context-dependent Time Preference
13 Pages Posted: 22 May 2020 Last revised: 1 Oct 2021
Date Written: December 21, 2020
Abstract
In a framework of sequential search, we define a decision maker’s time preference, which is endogenous to her optimal decisions and the environment. The induced time preference is non-stationary and context-dependent, which supports key empirical and experimental evidence, such as procrastination, i.e., the discount factor is increasing over time, and wealth effect, i.e., poor people tend to discount more. Calibration results are consistent with the well-known parametric models of actually-hyperbolic and quasi-hyperbolic discounting.
Keywords: Non-stationary time preference, Context-dependent time preference, Adaptive search, Procrastination, Wealth effect, Hyperbolic Discounting
JEL Classification: D81, D83, D91
Suggested Citation: Suggested Citation
Daniel Z. Li
Durham University Business School ( email )
Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom
HOME PAGE: http://danielzli.weebly.com/