Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2021-02-05
Number: 21-013/V
Author-Name: Michele Belot
Author-Workplace-Name: Cornell University
Author-Name: Philipp Kircher
Author-Workplace-Name: Cornell University
Author-Name: Paul Muller
Author-Workplace-Name: Vrije Universiteit Amsterdam
Title: Eliciting time preferences when income and consumption vary: Theory, validation & application to job search
Abstract: We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on lottery tickets with high rewards. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We validate our elicitation method experimentally on two student samples: one asked in December when their current budget is reduced by extraordinary expenditures for Christmas gifts; the other asked in February when no such extra constraints exist. We illustrate an application of our method with unemployed job seekers which naturally have income/consumption variation.
Classification-JEL: J64, D90
Keywords: time preferences, experimental elicitation, job search, hyperbolic discounting
File-URL: https://papers.tinbergen.nl/21013.pdf
File-Format: application/pdf
File-Size: 753283 bytes
Handle: RePEc:tin:wpaper:20210013