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Complexity and Time / Benjamin Enke, Thomas Graeber, Ryan Oprea.
- Format:
- Book
- Author/Creator:
- Enke, Benjamin.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w31047.
- NBER working paper series no. w31047
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2023.
- Summary:
- We provide experimental evidence that core intertemporal choice anomalies -- including extreme short-run impatience, structural estimates of present bias, hyperbolicity and transitivity violations -- are driven by complexity rather than time or risk preferences. First, all anomalies also arise in structurally similar atemporal decision problems involving valuation of iteratively discounted (but immediately paid) rewards. These computational errors are strongly predictive of intertemporal decisions. Second, intertemporal choice anomalies are highly correlated with indices of complexity responses including cognitive uncertainty and choice inconsistency. We show that model misspecification resulting from ignoring behavioral responses to complexity severely inflates structural estimates of present bias.
- Notes:
- Print version record
- March 2023.
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