Procrastination, Self-Imposed Deadlines and Other Commitment Devices

Kyle Hyndman and Alberto Bisin ()

No 904, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: 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) naive 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.

Keywords: Procrastination; hyperbolic discounting; time inconsistency (search for similar items in EconPapers)
Date: 2009-03

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Related works:
Working Paper: Procrastination, self-imposed deadlines and other commitment devices (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:smu:ecowpa:0904

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