Topics in Neuroeconomics Chen-Ying Huang, Chun-I Yeh Time Economics: Preferences, Discounting

1. Topics in Neuroeconomics • Chen-Ying Huang, Chun-I Yeh • Time • Economics: Preferences, Discounting • Psychology: Perceptions

5. Cell phones could be useful and productive. • But is there a time you wish you could be less involved with your smart phones?

6. When you start thinking about the overuse of cell phones, you are thinking about time or time inconsistency. • Past uninteresting, future interesting • Tonight you want to change. • Tomorrow when you wake up, you still start your day by turning on your cellphones and checking the social media first.

7. It boils down to you want to do something, but when the time comes, you are not able to carry it out. • You want your future self to eat less, study more and regularly exercise, but when tomorrow comes

8. Time inconsistency is serious when we start thinking about quitting smoking, stopping using drugs, controlling alcohol consumption. • Impulsivity and self-control come into the picture.

9. How can economists and neuroscientists help? What are their views? How do they understand these issues? • Economists treat the time inconsistency as preference changes with time. They come up with paradigms to measure how people discount future or their time preference. They model the way time preference changes. • Psychologists treat the perception of time as the primitive. They talk about how long people perceive a duration of time.

10. But could how you discount future correlate with how you perceive a duration of time? • We will see some experiments measuring either discounting or perception alone. We will also see some experiments attempting to connect the two concepts. • Moreover, the experiments include human, monkey, rat, mouse, raven and bumble bee experiment. Some are behavioral, others neural.

11. The core question of how to make time inconsistency less serious is an open question. • Commitment device (bind your future self now) • Freedom of choice

12. exponential discounting and hyperbolic discounting: 1 unit of pleasure delayed t units of time Exponential: Hyperbolic: K>0

13. Suppose the displeasure of exercise is 5. The pleasure is 10 but it occurs 3 days after you exercise. If I am planning whether to exercise tomorrow (-5, 1) vs. (10, 4) When tomorrow comes, when I am deciding whether to exercise (-5, 0) vs. (10, 3)

14. Planning (-5, 1) vs. (10, 4) Carrying out (-5, 0) vs. (10, 3) Exponential -5 vs. 10 -5 vs. 10 Time consistent

15. Planning (-5, 1) vs. (10, 4) Carrying out (-5, 0) vs. (10, 3) Hyperbolic vs vs Time inconsistent