Extended Present Bias: A Direct Experimental Test of the Hyperbolic Discounting Hypothesis

32 Pages Posted: 20 Jan 2011 Last revised: 5 Jul 2013

See all articles by Robin Chark

Robin Chark

National University of Singapore - Department of Marketing

Soo Hong Chew

National University of Singapore; National University of Singapore; HKUST

Songfa Zhong

National University of Singapore (NUS) - Department of Economics

Date Written: February 9, 2012

Abstract

In accounting for the phenomenon of present bias, the hyperbolic discounting and quasi-hyperbolic discounting models have distinct predictions beyond today. We provide experimental evidence supporting diminishing rate of discounting beyond present period under careful experimental controls. In three studies involving 1378 subjects in total, the average discount rates assessed in the delayed menus are each significantly lower than those for a more proximate menu. Yet, there is no significant difference between the average discount rates assessed in the delayed menus. Taken together, our findings suggest an extended present bias hypothesis with distinct present and near term bias followed by exponential discounting into the future.

Keywords: hyperbolic discounting, quasi-hyperbolic discounting, intertemporal choice, behavioral economics

JEL Classification: C91, D03, D90

Suggested Citation

Chark, Robin and Chew, Soo Hong and Zhong, Songfa, Extended Present Bias: A Direct Experimental Test of the Hyperbolic Discounting Hypothesis (February 9, 2012). Available at SSRN: https://ssrn.com/abstract=1743227 or http://dx.doi.org/10.2139/ssrn.1743227

Robin Chark (Contact Author)

National University of Singapore - Department of Marketing ( email )

NUS Business School
Mochtar Riady Building, BIZ 1, #08-16
Singapore, Singapore 119245
Singapore

Soo Hong Chew

National University of Singapore ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

National University of Singapore ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HKUST ( email )

Clear Water Bay
Kowloon, Hong Kong
China

Songfa Zhong

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

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