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Temptations and Dynamic Consistency

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Abstract

The objective of this article is to test a prediction of the quasi-hyperbolic model. The test is innovative in that it uses an experimental implementation in which there are two treatments: a forward market and a spot market. In each of these markets goods and activities are sold. The good and activities sold are investment goods or activities and temptation goods or activities. The prediction of the quasi-hyperbolic model is that in the spot (forward) market participants will buy more temptation (investment) goods and activities than in the forward market and less investment (temptation) good and activities. This prediction is not confirmed by the data, and hence is at odds with previous experiments which have shown support for the hyperbolic model. We speculate on the reasons for this.

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Authors and Affiliations

  1. Facoltà di Economia, Università di Bari, Via Camillo Rosalba 53, Bari, 70124, Italy

    Enrica Carbone

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  1. Enrica Carbone
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Correspondence to Enrica Carbone.

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Carbone, E. Temptations and Dynamic Consistency. Theor Decis 64, 229–248 (2008). https://doi.org/10.1007/s11238-007-9068-9

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  • DOI: https://doi.org/10.1007/s11238-007-9068-9

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