Document Type

Article

Publication Date

2014

Abstract

Several studies have shown that people greatly discount future bene ts and costs. However, most of the direct laboratory evidence of this phenomenon has focused on individual choice experiments. This paper investigates the degree to which the timing of payments a ects behavior in four commonly studies strategic settings: a Prisoner's Dilemma game, a Stag-Hunt game, a First Price Auction and a Second Price Auction. In all four settings, a two week delay in payo s has a comparable e ect to a 20% reduc- tion in current payo s. A follow-up study suggests that it is an individual's strategic response to the anticipated discount rate of others that might be driving this behavior rather than a participant's own discount factor.

Comments

Working Paper 14-11

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