Microeconomics · free preview
Present Bias and the Behavioral Frontier
People discount the near future steeply and the far future gently, commitment devices and defaults work with the grain of that curve, and the course closes where it began, with choice at the margin, now across time.
1. The bent discount curve
The bent discount curve
2. Nudges and the design of defaults
Nudges and the design of defaults
3. The course, whole
The course, whole
4. The last step
The last step
5. Present bias
A student sincerely plans to start studying next Monday, but when Monday arrives she postpones again. Which pattern is this?
6. Choosing the tool
A city wants less sugary drink consumption. Which instrument fits when the harm includes both public health costs and consumers' own present bias?
7. The commitment deposit
A gym charges 30 dollars a month and a member values each visit at 8 dollars of benefit, visiting 3 times a month without commitment. With a prepaid annual plan she would visit 6 times a month. Compute the extra monthly value created by the commitment, in dollars, as extra visits times value per visit.
8. Monday's procrastinator
A student sincerely plans to start studying next Monday, but when Monday arrives she postpones again. Which model captures this?
9. Matching the instrument
A city wants less sugary drink consumption where the harm includes buyers' own later regrets. Which policy package fits best?
10. The month's gym surplus
A gym charges 30 dollars a month, and a member visits exactly 4 times, valuing each visit at 9 dollars of benefit. Compute her monthly net surplus from membership in dollars, and write the number.
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