Bisin, Alberto and Hyndman, Kyle (2009): Procrastination, self-imposed deadlines and other commitment devices.
Download (588kB) | Preview
In this paper we model a decision maker who must exert costly eﬀort to complete a single task by a ﬁxed deadline. Eﬀort costs evolve stochastically in continuous time. The decision maker will then optimally wait to exert eﬀort until costs are less than a given threshold, the solution to an optimal stopping time problem. We derive the solution to this model for three cases: (1) time consistent decision makers, (2) naıve hyperbolic discounters and (3) sophisticated hyperbolic discounters. Sophisticated hyperbolic discounters behave as if they were time consistent but instead have a smaller reward for completing the task. We show that sophisticated decision makers will often self-impose a deadline to ensure early completion of the task. Other forms of commitment are also discussed.
|Item Type:||MPRA Paper|
|Original Title:||Procrastination, self-imposed deadlines and other commitment devices|
|Keywords:||Procrastination; Hyperbolic Discounting; Time Consistency|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty|
|Depositing User:||Kyle Hyndman|
|Date Deposited:||13. Jul 2009 23:42|
|Last Modified:||11. Feb 2013 16:49|
Ariely, D., and K. Wertenbroch (2002): “Procrastination, Deadlines, and Performance: Self-Control by Precommitment,” Psychological Science, 13(3), 219–224.
Brunnermeier, M., F. Papakonstantinou, and J. Parker (2007): “An Economic Model of the Planning Fallacy,” Working Paper.
Burger, N., G. Charness, and J. Lynham (2009): “Three Field Experiments on Procrastination and Willpower,” Working Paper.
Carr, P., R. Jarrow, and R. Myneni (1992): “Alternative Characterizations of American Put Options,” Mathematical Finance, 2, 78–106.
Cox, J. S., S. Ross, and M. Rubinstein (1979): “Option Pricing: A Simpliﬁed Approach,” Journal of Financial Economics, 7, 229–263.
Dixit, A., and R. Pindyck (1994): Investment Under Uncertainty. Princeton University Press, Princeton, N.J.
Gul, F., and W. Pesendorfer (2001): “Temptation and Self-Control,” Econometrica, 69, 1403–1436.
Gul, F., and W. Pesendorfer (2004): “Self-Control and the Theory of Consumption,” Econometrica, 72, 119–158.
Harris, C., and D. Laibson (2004): “Instantaneous Gratiﬁcation,” Working Paper.
Hsiaw, A. (2008): “Goal-Setting, Social Comparison, and Self-Control,” Working Paper.
Hull, J. C. (2005): Options, Futures & Other Derivatives. Prentice Hall, Upper Saddle River, N.J., 6th edn.
Laibson, D. (1994): “Essays in Hyperbolic Discounting,” Ph.D. thesis, Massachusetts Institute of Technology.
Laibson, D. (1997): “Golden Eggs and Hyperbolic Discounting,” Quarterly Journal of Economcis, 113, 443–477.
Miao, J. (2008): “Option Exercise With Temptation,” Economic Theory, 34, 473–501.
O’Donahue, T., and M. Rabin (1999a): “Doing It Now or Later,” American Economic Review, 89(1), 103–124.
O’Donahue, T., and M. Rabin (1999b): “Incentives for Procrastinators,” Quarterly Journal of Economcis, 114, 769–816.
Peskir, G., and A. Shiryaev (2006): Optimal Stopping and Free Boundary Problems. Birkhauser Verlag, Basel.
Phelps, E. S., and R. Pollak (1968): “On Second-Best National Saving and Game-Equilibrium Growth,” Review of Economic Studies, 35, 185–199.
Saez-Martı, M., and A. Sjogren (2008): “Deadlines and Distractions,” Journal of Economic Theory, 143, 153–176.
Trope, Y., and A. Fishbach (2000): “Counteractive Self-Control in Overcoming Temptation,” Journal of Personality and Social Psychology, 79(4), 493–506.