Coordination with Differential Time Preferences: Experimental Evidence / Marina Agranov, Jeongbin Kim, Leeat Yariv.

Format:

Book

Author/Creator:

Agranov, Marina.

Contributor:

National Bureau of Economic Research.

Kim, Jeongbin.

Yariv, Leeat.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31288.

NBER working paper series no. w31288

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

The experimental literature on repeated games has largely focused on settings where players discount the future identically. In applications, however, interactions often occur between players whose time preferences differ. We study experimentally the effects of discounting differentials in infinitely repeated coordination games. In our data, differential discount factors play two roles. First, they provide a coordination anchor: more impatient players get higher payoffs first. Introducing even small discounting differentials reduces coordination failures significantly. Second, with pronounced discounting differentials, intertemporal trades are prevalent: impatient players get higher payoffs for an initial phase and patient players get higher payoffs in perpetuity afterward.

Notes:

Print version record

May 2023.