WP 2011-18 Procrastination, uncertainty, and optimization
AUTHORS: George Etheredge and Don Ross
ABSTRACT. Procrastination encapsulates all of the features of apparently time-inconsistent preference that make addiction and related consumption anomalies challenging phenomena for modeling by economists. A common but ultimately unsatisfying response to this challenge has been for economists to try to capture what they perceive to be a core insights from psychological theorists, especially Ainslie, who understand the phenomena as consequences of hyperbolic discounting. The problem with this approach is that hyperbolic discounting is not discounting as economists understand it; but the common alternative, Laibsonís beta-delta or quasi-hyperbolic discounting, fails to capture essential properties of hyperbolic discounting upon which Ainslie relies for representing the observed phenomena. The paper confronts this dilemma by developing an economic model of procrastination that aims to capture Ainslie’s qualitative description of the phenomena but that drops direct appeal to any kind of discounting.