Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions

45 Pages Posted: 8 Oct 2010

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Yang Wang

Lafayette College

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2010

Abstract

We extend the semi-parametric estimation method for dynamic discrete choice models using Hotz and Miller’s (1993) conditional choice probability (CCP) approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We illustrate the proposed estimation method with an empirical application of adult women’s decisions to undertake mammography to evaluate the importance of present bias and naivety in the under-utilization of this preventive health care. Our results show evidence for both present bias and naivety.

Keywords: Time Inconsistent Preferences, Intrapersonal Games, Dynamic Discrete Choices, Preventive Care

JEL Classification: C14, I1

Suggested Citation

Fang, Hanming and Wang, Yang, Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions (October 6, 2010). PIER Working Paper No. 10-033, Available at SSRN: https://ssrn.com/abstract=1688547 or http://dx.doi.org/10.2139/ssrn.1688547

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Yang Wang

Lafayette College ( email )

Easton, PA 18042
United States
610-330-5298 (Phone)
610-330-5715 (Fax)

HOME PAGE: http://economics.lafayette.edu/

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