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 discounted 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 range 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 discounted utility model to explore the effect of present bias.

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