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

Published online by Cambridge University Press:  14 March 2025

Uttara Balakrishnan ,
Johannes Haushofer  and
Pamela Jakiela
Uttara Balakrishnan*
Affiliation:
IMPAQ International, Washington, DC, USA
Johannes Haushofer*
Affiliation:
Princeton University, Princeton, USA Busara Center for Behavioral Economics, Nairobi, Kenya
Pamela Jakiela*
Affiliation:
Center for Global Development, Washington, DC, USA
*
[email protected]
[email protected]
[email protected]
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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.

Keywords

Discount ratePresent biasExperimentMobile money

JEL classification

O12: Microeconomic Analyses of Economic Development C91: Laboratory, Individual Behavior D90: General‡
Type
Original Paper
Information
Experimental Economics , Volume 23 , Issue 2 , June 2020 , pp. 294 - 321
Copyright
Copyright © 2019 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-019-09617-y) contains supplementary material, which is available to authorized users.

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