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Can time-inconsistent preferences explain hypothetical biases?

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  • Krčál, Ondřej
  • Peer, Stefanie
  • Staněk, Rostislav

Abstract

We investigate whether the value of time (VOT) depends on when the corresponding preferences are measured: in advance, just before, or after the time period for which the time preferences are being evaluated. We find that the VOT is highest when elicited just before the time period. This is an indication of the VOT being affected by time-inconsistent, and more specifically, present-biased preferences. We argue that this result may explain why time valuations based on stated preference (SP) data are typically found to be lower than those based on revealed preference (RP) data: most RP surveys evaluate the preferences of respondents close to the time period for which the preferences are being measured, whereas the time instances for which preferences are evaluated in SP surveys tend to be more abstract, or referencing past or future time periods.

Suggested Citation

  • Krčál, Ondřej & Peer, Stefanie & Staněk, Rostislav, 2021. "Can time-inconsistent preferences explain hypothetical biases?," Economics of Transportation, Elsevier, vol. 25(C).
    • Handle: RePEc:eee:ecotra:v:25:y:2021:i:c:s2212012221000125
    DOI: 10.1016/j.ecotra.2021.100207
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    Cited by:

    1. Kosíková, Renata & Krčál, Ondřej & Peer, Stefanie, 2024. "The value of time in a repeated and one-off setup," Research in Transportation Economics, Elsevier, vol. 103(C).

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    More about this item

    Keywords

    Valuation of time; Time inconsistency; Present bias; Hypothetical bias; Lab experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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