Document Type
Article
Language
eng
Format of Original
17 p.
Publication Date
10-2015
Publisher
Elsevier
Source Publication
Journal of Behavioral and Experimental Economics
Source ISSN
2214-8043
Abstract
We run experiments with real monetary rewards ranging from $10 to $500 to estimate rates of time preference and test for hyperbolic discounting. Individuals become more patient with increasing reward sizes, which is consistent with a magnitude effect. This magnitude effect is robust across specifications including a nonparametric analysis and structural maximum likelihood estimation. Subjects are divided between two different elicitation mechanisms (one a matching task and one a choice task) that should both theoretically provide an incentive for participants to reveal their true time preferences. We find some evidence of differences between the rates from the matching and choice tasks but these differences disappear when appropriately modeling the behavioral noise. We uncover little to no evidence of present-biased time preferences.
Recommended Citation
Meyer, Andrew G., "The Impacts of Elicitation Mechanism and Reward Size on Estimated Rates of Time Preference" (2015). Economics Faculty Research and Publications. 527.
https://epublications.marquette.edu/econ_fac/527
Comments
NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Behavioral and Experimental Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Behavioral and Experimental Economics, Vol. 58, (October 2015): 132-148. DOI. © 2015 Elsevier. Used with permission.