Time-Inconsistent Generosity: Present Bias Across Individual and Social Contexts

Abstract

We investigate the presence and stability of dynamically inconsistent time preferences across contexts with and without interpersonal trade-offs. In a longitudinal experiment subjects make a series of intertemporal allocation decisions of real-effort tasks between themselves and another person. We find substantial time inconsistency in generosity: agents become disproportionally more selfish when decisions have immediate rather than delayed consequences. Structural estimations reveal that this is because agents exhibit present bias in own but not in others' consumption. At the individual level, present bias in own consumption is a stable behavioral trait which is correlated across individual and social contexts.