Present Bias: Lessons Learned and to Be Learned
American Economic Review · 2015 · Volume 105 · Issue 5
Abstract
While present bias is an old idea, it only took hold in economics following David Laibson's (1994) dissertation. Over the past 20 years, research has led to a much better theoretical understanding of present bias, when and how to apply it, and which ancillary assumptions are appropriate in different contexts. Empirical analyses have demonstrated how present bias can improve our understanding of behavior in various economic field contexts. Nonetheless, there is still much to learn. In this paper, we give our assessment of some lessons learned, and to be learned.
Keywords
Consumer Economics: Theory, Allocative Efficiency, Cost-Benefit Analysis, Search, Learning, Information and Knowledge, Communication, Belief, Unawareness, Intertemporal Household Choice, Life Cycle Models and Saving
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