Abstract

In this paper we elicit preferences for money-time pairs via experimental techniques. We estimate a general specification of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasi-hyperbolic discounting. Our experimental data do not appear peculiar in any dimension. In particular, we find clear evidence for present bias, as most of the previous literature. However, no evidence for quasi-hyperbolic discounting is found, and the data strongly favor instead a specification with a small present bias in the form of a fixed cost, of the order of $4 on average across subjects. With such a fixed cost the curvature of discounting is imprecisely estimated and exponential discounting is hardly rejected. In this specification the present bias tends to vanish for economically relevant monetary rewards.