Scheduling with present bias
Production and Operations Management · 2023 · Volume 32 · Issue 6
Abstract
The study of time-inconsistent decision-making, in particular present bias, has greatly influenced the field of behavioral economics over the last two decades. Moreover, it has resulted in the design and implementation of widely used incentive schemes for various important applications. However, the effect of present bias on decision-making for operational problems has been studied less. This work considers the effect of present bias in a simple scheduling system that requires decisions about project timing and sequencing. We design algorithms that enable optimization of revenue less cost under present bias for both naive and sophisticated (i.e., self-aware) decision-makers. We describe managerial insights about the relative performance of time-consistent, naive, and sophisticated decision-makers, and how to mitigate the effects of present bias. Both theoretical and computational results support these insights.
Keywords
present bias, scheduling of projects, optimal timing, optimal sequencing
Enable JavaScript for citation tools and additional paper interactions.