Interacting mechanisms of time inconsistency |
| |
| Institution: | 1. Department of Management, University of Isfahan, Isfahan, Iran;2. Business Systems and Analytics Department, Distinguished Chair of Business Analytics, La Salle University, Philadelphia, PA 19141, USA;3. Business Information Systems Department, Faculty of Business Administration and Economics, University of Paderborn, Paderborn, Germany;4. Faculty of Economics and Management, Free University of Bolzano, Bolzano, Italy;5. Department of Industrial Management, Persian Gulf University, Bushehr, Iran;1. Department of Opto-Electronic Engineering, National Dong Hwa University, Hualien 97401, Taiwan;2. Department of Chemistry, Fu Jen Catholic University, New Taipei City 24205, Taiwan;1. Division of Neuropsychopharmacology, University of Tartu, Estonia;2. Department of Psychology, University of Tartu, Estonia;3. Estonian Centre of Behavioural and Health Sciences, University of Tartu, Estonia;1. University of Naples Parthenope, Italy;2. University of Naples Parthenope, Italy and CESifo, Germany |
| |
| Abstract: | We interact two prominent behavioral mechanisms of time inconsistency that have been used to study inadequate saving: hyperbolic discounting and short-term planning. Hyperbolic discounting is a conventional way to model impulsive decision making, and short planning horizons have been used to represent myopia. One might expect that interacting both mechanisms within the same model would compound the inadequacy of saving. However, our key finding takes the form of a paradox: hyperbolic discounting does not affect consumption and saving allocations if the planning horizon is short and fixed, although it will affect allocations if the planning horizon is equal to the remaining life span. We demonstrate analytically that this finding is robust to the shape of the disposable income path, to the coarseness of the time grid, and to alternative forms of the period utility function. |
| |
| Keywords: | Dual mechanisms of time inconsistency Hyperbolic discounting Short planning horizons Life-cycle consumption and saving |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
