EconPapers    
Economics at your fingertips  
 

A Flexible Test for Present Bias and Time Preferences using Land-Lease Contracts

Pieter Gautier () and Aico van Vuuren ()

No 11-087/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: When agents have present bias, they discount more between now and thenext period than between period t (> 1) and t + 1. How fast the future discount rate (evaluated today) decays is an empirical question. Weshow that the discount function can be non-parametrically identified withcontracts that specify payments that take place at various points in timein the future and which are traded and priced in a competitive market.We use a unique land lease-contract data set for Amsterdam, which hasthe above properties, to test for present bias in a flexible way. We findno evidence for present bias in this market. Even though we allow for ageneral-hyperbolic specification (which has exponential discounting as aspecial case), our estimates converge to an exponential discount functionwith a corresponding discount rate (in our baseline specification) of 8 %.

Keywords: present bias; hyperbolic discounting; discount rate; hedonic estimation (search for similar items in EconPapers)
JEL-codes: C52 D03 D12 (search for similar items in EconPapers)
Date: 2011-06-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://papers.tinbergen.nl/11087.pdf (application/pdf)

Related works:
Working Paper: A Flexible Test for Present Bias and Time Preferences Using Land-Lease Contracts (2011) Downloads
Working Paper: A Flexible Test for Present Bias and Time Preferences using Land-Lease Contracts (2011) Downloads
Working Paper: A Flexible Test for Present Bias and Time Preferences Using Land-Lease Contracts (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20110087

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().

 
Page updated 2019-10-18
Handle: RePEc:tin:wpaper:20110087