Present Bias and Collective Dynamic Choice in the Lab

25 Pages Posted: 13 Oct 2012 Last revised: 12 Apr 2014

See all articles by Matthew O. Jackson

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Leeat Yariv

Princeton University; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: February 12, 2014

Abstract

We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, utilitarian aggregation necessitates a present bias. In lab experiments three quarters of `social planners' exhibited present biases, and less than two percent were time consistent. Roughly a third of subjects acted as if they were pure utilitarians, and the rest chose as if they also had varying degrees of distributional concerns.

Keywords: collective decisions, time inconsistency, collective utility functions, consumption plans, representative agents, voting, voting rules, majority voting, transitivity, hyperbolic discounting, present bias

JEL Classification: D72, D71, D03, D11, E24

Suggested Citation

Jackson, Matthew O. and Yariv, Leeat, Present Bias and Collective Dynamic Choice in the Lab (February 12, 2014). Available at SSRN: https://ssrn.com/abstract=2161036 or http://dx.doi.org/10.2139/ssrn.2161036

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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