Nonparametric Analysis of Time-Inconsistent Preferences

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This paper 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.
Original languageEnglish
JournalReview of Economic Studies
Issue number6
Pages (from-to)2687-2734
Publication statusPublished - 2021

    Research areas

  • Quasi-hyperbolic discounting, evealed preference, D11, D12, D20

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