“Temptation: Immediacy and certainty”
Abstract
Is an option especially tempting when it is both immediate and certain? I test the effect of risk on the present-bias factor under quasi-hyperbolic discounting. In my experiment workers allocate about thirty to fifty minutes of real-effort tasks between two weeks. I study dynamic consistency by comparing choices made two days in advance of the workday with choices made when work is imminent. My novel design permits estimation of present bias using a decision with a consequence that is both immediate and certain. I find far greater present bias when the consequence is certain, with broad implications for any economic decision involving a present-biased individual. I offer a methodological remedy for experimental economists.