Interim deadline for procrastinators

0578917 - NHU-C 2024 CZ eng V - Research Report
Razumovskii, Artem
Interim deadline for procrastinators.
Prague: CERGE-EI, 2023. 50 s. CERGE-EI Working Paper Series, 769. ISSN 2788-0443
Institutional support: Cooperatio-COOP
Keywords : time-inconsistent preferences * present bias * deadlines
OECD category: Applied Economics, Econometrics
https://www.cerge-ei.cz/pdf/wp/Wp769.pdf

People are partially time inconsistent and many have difficulties committing to a detailed schedule for a project. I study optimal interim deadlines and how they
affect the behavior and resulting welfare of the present-biased agent. I consider a model in which there are three types of agent in terms of how the agent understands her present bias: naive, sophisticated, and partially-sophisticated. For each type, there is a unique design for an exogenous interim deadline that maximizes the agent’s welfare. However, only the sophisticated agent would self-impose an optimal interim deadline, while the naive agent would not apply a self-imposed deadline at all. The partially-sophisticated agent sets a nonoptimal self-imposed deadline and can even decrease her own welfare by imposing it. The main result is that the partially sophisticated agent who is relatively less present-biased would decrease her own welfare by using a self-imposed deadline, and the partially-sophisticated agent who is relatively more present-biased would increase her welfare.

Permanent Link: https://hdl.handle.net/11104/0347831