Compensated Discount Functions: An Experiment on the Influence of Expected Income on Time Preferences

摘要: This paper examines the empirical question of whether subjects’ static choices among rewards received at different times are influenced by their expected income levels those times. Moreover, we recover time preferences after compensating for possible effects. Besides eliciting preference between standard delayed rewards, experimental design also elicited over that only if subject’s remains approximately constant. These preferences, along with subjective probabilities satisfying condition, make correction possible. We conducted experiments in Iceland, where our prompt access to tax records enabled us condition on realizations. find background is associated unconditional rewards. While most people exhibited present bias when comparing subjects stable did not. The results similar entire sample once correct discount functions suggests expectations have an effect future and this may account some present-bias observed experiments.The Supplement available following URL: http://ssrn.com/abstract=2446690