Doing It Now or Later

Matthew Rabin and Ted O'Donoghue

American Economic Review, 1999, vol. 89, issue 1, 103-124

Abstract: The authors examine self-control problems--modeled as time-inconsistent, present-biased preferences--in a model where a person must do an activity exactly once. They emphasize two distinctions: do activities involve immediate costs or immediate rewards, and are people sophisticated or naive about future self-control problems? Naive people procrastinate immediate-cost activities and preproperate--do too soon--immediate-reward activities. Sophistication mitigates procrastination but exacerbates preproperation. Moreover, with immediate costs, a small present bias can severely harm only naive people, whereas with immediate rewards it can severely harm only sophisticated people. Lessons for savings, addiction, and elsewhere are discussed.

JEL-codes: D11 D91 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/aer.89.1.103
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Citations: View citations in EconPapers (1273)

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Related works:
Working Paper: Doing It Now or Later (1997)
Working Paper: Doing It Now or Later (1996)
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