Working Papers
Measuring Preference over Intertemporal Profiles: Magnitude Effect and All-Sooner Effect. June 2018.
Abstract: We develop a simple method for measuring intertemporal preferences: directly measuring preferences over intertemporal profiles, that is, combinations of outcomes at several points in time. The method is parameter-free and independent of time horizon effects. It requires weak assumptions on preferences to be measured, and hence can be used to test a wide range of models. By applying the method, we document two characteristics of preferences. First, utility curvature is smaller for higher stakes, but no evidence shows that (generalized) discount factors change with the stake (the magnitude effect). Second, people are overly impatient when it is possible to have all rewards on the earliest date (the all-sooner effect). We propose a simple model which captures these two effects to facilitate parametric estimation in future studies.
[Paper] [Slides]
Magnitude Effect in Intertemporal Allocation Tasks. October 2016. joint with Jan Potters.
Abstract: We investigate how the intertemporal allocation of monetary rewards is influenced by the size of the total budget, with a particular interest in the channels of influence. We find a significant magnitude effect: the budget share allocated to the later date increases with the size of the budget. This effect does not depend on whether the sooner reward is paid in the present or in the future, implying that the factors which drive the present bias cannot account for the magnitude effect. At the aggregate level as well as at the individual level, we find magnitude effects both on the discount rate and on intertemporal substitutability (i.e. utility curvature). The latter effect is consistent with theories in which the degree of asset integration is increasing in the stake.
[Paper] [Slides]
Does Making a Choice Affect Subsequent Belief Formation? An Experimental Study. June 2018.
Abstract: When uncertainty is present, choices are based on beliefs, but do choices in turn have an effect on subsequent belief formation? We perform an experiment to study choice-induced belief change in an individual decision-making context. After being presented with noisy signals about the values of two options, subjects are randomly assigned to one of the three treatments: making a choice between the two options, receiving a random option, or possessing no option. Then they are presented with more signals and are asked to estimate the values of the two options. We find no significant differences between the distributions of estimates in the three groups, irrespective of whether belief elicitation is incentivized or not, and irrespective of whether previous signals are perfectly accessible or not. This suggests that making a choice does not lead to an economically meaningful effect on subsequent belief formation in our setting.
[Paper] [Slides]
Abstract: We develop a simple method for measuring intertemporal preferences: directly measuring preferences over intertemporal profiles, that is, combinations of outcomes at several points in time. The method is parameter-free and independent of time horizon effects. It requires weak assumptions on preferences to be measured, and hence can be used to test a wide range of models. By applying the method, we document two characteristics of preferences. First, utility curvature is smaller for higher stakes, but no evidence shows that (generalized) discount factors change with the stake (the magnitude effect). Second, people are overly impatient when it is possible to have all rewards on the earliest date (the all-sooner effect). We propose a simple model which captures these two effects to facilitate parametric estimation in future studies.
[Paper] [Slides]
Magnitude Effect in Intertemporal Allocation Tasks. October 2016. joint with Jan Potters.
Abstract: We investigate how the intertemporal allocation of monetary rewards is influenced by the size of the total budget, with a particular interest in the channels of influence. We find a significant magnitude effect: the budget share allocated to the later date increases with the size of the budget. This effect does not depend on whether the sooner reward is paid in the present or in the future, implying that the factors which drive the present bias cannot account for the magnitude effect. At the aggregate level as well as at the individual level, we find magnitude effects both on the discount rate and on intertemporal substitutability (i.e. utility curvature). The latter effect is consistent with theories in which the degree of asset integration is increasing in the stake.
[Paper] [Slides]
Does Making a Choice Affect Subsequent Belief Formation? An Experimental Study. June 2018.
Abstract: When uncertainty is present, choices are based on beliefs, but do choices in turn have an effect on subsequent belief formation? We perform an experiment to study choice-induced belief change in an individual decision-making context. After being presented with noisy signals about the values of two options, subjects are randomly assigned to one of the three treatments: making a choice between the two options, receiving a random option, or possessing no option. Then they are presented with more signals and are asked to estimate the values of the two options. We find no significant differences between the distributions of estimates in the three groups, irrespective of whether belief elicitation is incentivized or not, and irrespective of whether previous signals are perfectly accessible or not. This suggests that making a choice does not lead to an economically meaningful effect on subsequent belief formation in our setting.
[Paper] [Slides]
Work in progress
Dynamics of Self-Control: Theory and Experiment
