Artem Razumovskii (CERGE-EI) will present the paper “Interim Deadline for Procrastinators” on May 8th, 2024, at 10:30 AM, in room QA406.
Abstract:
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 naïve 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 given the same degree of sophistication.