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Concentration Bias in Intertemporal Choice

Markus Dertwinkel-Kalt, Holger Gerhardt (), Gerhard Riener, Frederik Schwerter and Louis Strang
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Markus Dertwinkel-Kalt: University of Konstanz
Frederik Schwerter: University of Cologne
Louis Strang: University of Cologne

No 76, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Many intertemporal trade-offs are unbalanced: while the advantages of options are concen- trated in a few periods, the disadvantages are dispersed over numerous periods. We provide novel experimental evidence for “concentration bias”, the tendency to overweight advantages that are concentrated in time. Subjects commit to too much overtime work that is dispersed over multiple days in exchange for a bonus that is concentrated in time: concentration bias increases subjects’ willingness to work by 22.4% beyond what standard discounting models could account for. In additional conditions and a complementary experiment involving mon- etary payments, we study the mechanisms behind concentration bias and demonstrate the robustness of our findings.

Keywords: Attention; Focusing; Bounded rationality; Intertemporal choice; Future bias; Present bias; Framing (search for similar items in EconPapers)
JEL-codes: D01 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2021-04
New Economics Papers: this item is included in nep-cbe, nep-cwa, nep-dcm and nep-exp
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_076_2021.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:076

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