(Im)patience by Proxy: Making Intertemporal Decisions for Others

Description
Decisions with consequences that play out over time are ubiquitous in business, policy, and family relations, and frequently the agent making such a decision is not the one who bears the consequences. We use a lab experiment to examine whether individuals make different intertemporal decisions for others of varying social distance than for themselves. Subjects make a series of intertemporal work time allocation decisions for themselves and for another individual, either a friend or a stranger. We find that if they do not receive information about the decision recipient, people choose more impatiently (moving more disutility cost into the future) for others than for themselves. In other words, a decision made for you by an uninformed proxy is more impatient than a decision you would make for yourself and thus is probably suboptimal. This result contrasts with some of the literature, a divergence that may be because most of those studies are in the benefit domain while ours is in the cost domain and because (as we find in a separate survey) people perceive procrastination as qualitatively different from other discounting decisions. We provide evidence that this bias in proxy decisions exists because benevolent decision-makers believe their decision recipients to be more impatient than they actually are. First, survey evidence suggests that uninformed individuals believe that they are more patient than other subjects. Second, when the decision-maker sees information about how patient the recipient believes herself to be, this impatience bias disappears if the recipient is a friend. Taken together, our results show that given limited information, proxy decision-makers choose more impatiently than principals would prefer, but information can mitigate this suboptimal choice if social distance is low. Our results also suggest that intertemporal choice may not be behaviorally the same over time as over money.

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