Rush and Procrastination under Hyperbolic Discounting and Interdependent Activities

Isabelle Brocas and Juan D. Carrillo

Journal of Risk and Uncertainty, 2001, vol. 22, issue 2, 64 pages

Abstract: We analyze the decision of individuals with time-inconsistent preferences to invest in projects yielding either current costs and future benefits or current benefits and future costs. We show that competition between agents for the same project mitigates the tendency to procrastinate on the first type of activities (i.e. to undertake them "too late") and to rush on the second one (i.e. to undertake them "too early"). Competition can therefore increase the expected welfare of each individual. On the contrary, complementarity of projects exacerbates the tendency to rush and to procrastinate and therefore it can decrease the expected welfare of each individual. Copyright 2001 by Kluwer Academic Publishers

Date: 2001
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