How soon is now? Evidence of present bias from convex time budget experiments

Uttara Balakrishnan, Johannes Haushofer, Pamela Jakiela

Research output: Contribution to journalArticle

Abstract

We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from 494 participants, using convex time budgets and tightly controlling for transaction costs. Using the Kenyan mobile money system M-Pesa to make real-time transfers to subjects’ phones , we vary whether same-day payments are made immediately after the experimental session or at the close of the business day. We find strong evidence of present bias, with estimates of the present bias parameter ranging from 0.902 to 0.924—but only when same-day payments are made immediately after the experiment.

Original languageEnglish (US)
Pages (from-to)294-321
Number of pages28
JournalExperimental Economics
Volume23
Issue number2
DOIs
StatePublished - Jun 1 2020

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)

Keywords

  • Discount rate
  • Experiment
  • Mobile money
  • Present bias

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