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Non-parametric Analysis of Time-Inconsistent Preferences

Comment on `Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting’ by Hanming Fang and Yang Wang

Laura Blow, Martin Browning and Ian Crawford

Review of Economic Studies, 2021, vol. 88, issue 6, 2687-2734

Abstract: This article provides a revealed preference characterisation of quasi-hyperbolic discounting which is designed to be applied to readily available expenditure surveys. We describe necessary and sufficient conditions for the leading forms of the model and also study the consequences of the restrictions on preferences popularly used in empirical lifecycle consumption models. Using data from a household consumption panel dataset, we explore the prevalence of time-inconsistent behaviour. The quasi-hyperbolic model provides a significantly more successful account of behaviour than the alternatives considered. We estimate the joint distribution of time preferences and the distribution of discount functions at various time horizons.

Keywords: Quasi-hyperbolic discounting; Revealed preference; D11; D12; D90 (search for similar items in EconPapers)
Date: 2021
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Working Paper: Nonparametric Analysis of Time-Inconsistent Preferences (2020) Downloads
Working Paper: Nonparametric Analysis of Time-Inconsistent Preferences (2017) Downloads
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