Doing It Now or Later

TLDR

The paper investigates how present‑biased preferences affect a one‑time activity, comparing immediate‑cost versus immediate‑reward tasks and sophisticated versus naive agents. Using a time‑inconsistent model, the authors analyze the decision to perform the activity once, explicitly distinguishing cost/reward timing and agent sophistication. Naive agents procrastinate costly tasks and pre‑prepare rewarding ones, while sophistication reduces procrastination but increases pre‑preparation; a small present bias harms naive agents with costs and sophisticated agents with rewards, with implications for savings and addiction. JEL codes: A12, B49, C70, D11, D60, D74, D91, E21.

Abstract

We examine self-control problems—modeled as time-inconsistent, present-biased preferences—in a model where a person must do an activity exactly once. We emphasize two distinctions: Do activities involve immediate costs or immediate rewards, and are people sophisticated or naive about future self-control problems? Naive people procrastinate immediate-cost activities and preproperate—do too soon—immediate-reward activities. Sophistication mitigates procrastination, but exacerbates preproperation. Moreover, with immediate costs, a small present bias can severely harm only naive people, whereas with immediate rewards it can severely harm only sophisticated people. Lessons for savings, addiction, and elsewhere are discussed. (JEL A12, B49, C70, D11, D60, D74, D91, E21)