Is Generosity Time-Inconsistent? Present Bias across Individual and Social Contexts

Felix Kölle and Lukas Wenner
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Lukas Wenner: University of Cologne

The Review of Economics and Statistics, 2023, vol. 105, issue 3, 683-699

Abstract: We investigate dynamically inconsistent time preferences across contexts with and without interpersonal trade-offs. In a longitudinal experiment, participants make a series of intertemporal allocation decisions of real-effort tasks between themselves and another person. Our results reveal that agents are present-biased when making choices that affect only themselves but not when choosing on behalf of others. Despite this asymmetry, we find no evidence for time-inconsistent generosity, that is, when choices involve trade-offs between one's own and others' consumption. Structural estimations reveal no individual-level correlation of present bias across contexts. Discounting in social situations thus seems to be conceptually different from discounting in individual situations.

Date: 2023
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