Oxford - Suggested Flashcards
Andreoni and Sprenger (2012a) (AER)
Choi et al (2007)
[Time Preferences]
Experimental discount rates usually higher than what seems plausible, often explained by present bias.
Measures of risk aversion to identify concavity attempt to fix another well known bias: Linear consumption utility
Result:
- Reasonable discounting, curvature and dynamically consistent time preferences.
- No evidence of hyperbolic discounting or present bias.
[Risk Preferences]
- Diagram from Choi et al 2007 –> Risk averse move towards 45 degree, diversifying asset investments
- AB = budget constraint, Convex curves if risk averse
DellaVigna and Malmendier (2006)
Paying not to go to the Gym
Membership: cost per visit $17
Pay as you go: $10
People will pay for commitment device. 3 Lareg US health club datasets.
Procrastination in cancelling.
Lag between last use and cancellation is + correlated with initial month overpayment
Model of beta-delta discounting explains this.
Camerer, Babcock, Loewenstein and Thaler (1997)
New York Cab Drivers
McClure et. al (2007)
Juice now or 2x Juice in 5 minutes –> 60% now
Juice in 20mins or 2x Juice in 25 minutes –> 70% later
Limbic system of brain for immediate rewards, prefrontal cortex for delayed rewards.
Gruber and Koszegi (2004)
Taxation on cigarettes can be significantly welfare improving if smokers are present biased.
Ashraf, Karlan and Yin (2006)
Commitment device to commit to savings. Phillipine banks.
28.4% take up rate of commitment, savings balances 12m laters increased by 81% for those in treatment group.
Gine, Karlan and ZInman (2009)
Voluntary commitment product for smoking cessation. Savings test linked to urine tests.
11% take up, 3% points more likely to pass the tests adn very persistent effects after 12 months.
Thaler and Benartzi (2004)
Saving for retirement with a SMarT program:
- (1): Lag between sign up and start, mitigate present bias
- (2): Rising contribution rates: alters reference points
- (3): Automatic increase in rate: avoid status quo bias
- (4): Opt out any time: high enrollment and retention
- 78% joined, and 80% stayed in the program through 4 pay rises.
- 3.5-13.6% higher saving rates over 40 months
Gruber (2001)
Net cost of smoking 0, taxation shouldnt be as severe. Focus on informational policy to allow consumers to make informed decisions.
Positive externalities: die early, release pressure on healthcare systems
Distributional effects too, impaccting low income people.
Loomes and Sugden (1982)
Regret theory: post choice, we think about lost options
[Reversed]
[Time Preferences]
Experimental discount rates usually higher than what seems plausible, often explained by present bias.
Measures of risk aversion to identify concavity attempt to fix another well known bias: Linear consumption utility
Result:
- Reasonable discounting, curvature and dynamically consistent time preferences.
- No evidence of hyperbolic discounting or present bias.
[Risk Preferences]
- Diagram from Choi et al 2007 –> Risk averse move towards 45 degree, diversifying asset investments
- AB = budget constraint, Convex curves if risk averse
Andreoni and Sprenger (2012a) (AER)
Choi et al (2007)
[Reversed]
Paying not to go to the Gym
Membership: cost per visit $17
Pay as you go: $10
People will pay for commitment device. 3 Lareg US health club datasets.
Procrastination in cancelling.
Lag between last use and cancellation is + correlated with initial month overpayment
Model of beta-delta discounting explains this.
DellaVigna and Malmendier (2006)
[Reversed]
New York Cab Drivers
Camerer, Babcock, Loewenstein and Thaler (1997)
[Reversed]
Juice now or 2x Juice in 5 minutes –> 60% now
Juice in 20mins or 2x Juice in 25 minutes –> 70% later
Limbic system of brain for immediate rewards, prefrontal cortex for delayed rewards.
McClure et. al (2007)
[Reversed]
Taxation on cigarettes can be significantly welfare improving if smokers are present biased.
Gruber and Koszegi (2004)
