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Intertemporal choice with liquidity constraints: Theory and experiment

Dale Stahl

Economics Letters, 2013, vol. 118, issue 1, 101-103

Abstract: Since Thaler (1981), we have lived with the uncomfortable stylized fact that many humans choose strictly dominated actions in intertemporal choice experiments. We designed an experiment to probe the reasons for the apparently suboptimal behavior, and we find that the classic Fisher (1930) intertemporal choice theory with perceived transaction costs and liquidity constraints is perfectly consistent with our experimental data, whereas hyperbolic discounting is not.

Keywords: Intertemporal choice; Liquidity; Present bias; Hyperbolic discounting (search for similar items in EconPapers)
JEL-codes: C9 D1 D9 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:101-103