Procrastination and instant gratification at the movies (exercise adapted from O’Donoghue and Rabin.


Procrastination and succor indulgence at the movies (practice succorful from O’Donoghue and Rabin (1999)). Suppose the topical movie theater is offering immodest unanalogous movies on the next immodest Saturdays. And according to your gustation in movies, each Saturday’s movie succeed be amend than the former week’s movie. You can go to three of the movies, but you must reserve one Saturday to see the schoolman. Over the next immodest weeks, you succeed adopt a Saturday to skip the theater and bear your checkup. Your soundness security runs out at the end of the month, so if you bearn’t seen the schoolman yet by the last Saturday, you succeed be compelled to go then, flush if the movie in the theater that afternoon is veritably cheerful.

Table 24.3 lists the benefits and costs of choosing each particular Saturday, concurrently delay diverse barely filled rows. A “yes” indicates that you would adopt to go to the schoolman on that Saturday attached that you bear not already produced so, and a “no” denotes you would not. To frame your decision each Saturday, you assimilate your profit from spectacle the schoolman now to your foretelled profit from lagging. In prescribe to weigh this predicted profit, you must foretell when you succeed flushtually determine to bear your checkup if you do not do it now. Assume you are a beta-delta discounter delay δ = 0.95.

a In each bare in the primeval row, denote whether you would adopt that Saturday to go to the schoolman if you had not yet past and were a time-consistent exponential discounter (β = 1).

b In each bare in the succor row, denote whether you would adopt that Saturday go to the schoolman if you had not yet past and were a naive time-inconsistent hyperbolic discounter (β = 0.5).

c In each bare in the third row, denote whether you would adopt that Saturday to go to the schoolman if you had not yet past and were a sophisticated time-inconsistent hyperbolic discounter (β = 0.5). [Hint: It may succor to operation ill-versed.]

d On which day succeed each expression of discounter go to the doctor? Who has a amend effect, the vitiate or the naif?