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Investigation of the Convex Time Budget Experiment by Parameter Recovery Simulation

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  • Keigo Inukai
  • Yuta Shimodaira
  • Kohei Shiozawa

Abstract

The convex time budget (CTB) method is a widely used experimental technique for eliciting an individual’s time preference in intertemporal choice problems. This paper investigates the accuracy of the estimation of the discount factor parameter and the present bias parameter in the quasi-hyperbolic discounting utility function for the CTB experiment. In this paper, we use a simulation technique called “parameter recovery.” We found that the precision of present bias parameter estimation is poor within the scope of previously reported parameter estimates, making it difficult to detect the effect of present bias. Our results recommend against using a combination of the CTB experimental task and the quasi-hyperbolic discounting utility model to explore the effect of present bias. This paper contributes to addressing the replicability issue in experimental economics and highlights the importance of auditing the accuracy of parameter estimates before conducting an experiment.

Suggested Citation

  • Keigo Inukai & Yuta Shimodaira & Kohei Shiozawa, 2022. "Investigation of the Convex Time Budget Experiment by Parameter Recovery Simulation," ISER Discussion Paper 1185r, Institute of Social and Economic Research, Osaka University, revised Mar 2023.
    • Handle: RePEc:dpr:wpaper:1185r
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    References listed on IDEAS

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