1. The bias for the present will vary from one individual to another. What happens in the...

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1. The bias for the present will vary from one individual to another. What happens in the previous example if the student has a smaller bias for the present that can be captured by b = 0.7.

2. Imagine a decision where all the benefits occur exactly an hour before the costs. Assume the benefits = £10 and the costs = £20. Using the quasi-hyperbolic discounting model, show how a person’s preferences will change with the passage of time.

3. Assume you have a present bias but are fully aware of the inconsistent nature of your preferences. What actions could you take to make sure you actually carry out your planned decisions?

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Economics

ISBN: 978-1292187853

10th edition

Authors: John Sloman, Jon Guest, Dean Garratt

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