Identification of Time Inconsistent Models
Economists have recently argued that time inconsistency may play a central role in explaining inter-temporal behavior, particularly among poor households. However, time-preference parameters are typically not identified in standard dynamic choice models and little is known about the fraction of inconsistent agents in the population. We formulate a dynamic discrete choice model in an unobservedly heterogeneous population of possibly time-inconsistent agents. We show that given two exclusion restrictions, both agents’ time preferences and population type probabilities are separately identified. Using specifically collected information combined with a field intervention in rural India, we estimate all time-preference parameters as well as the population fractions of time-consistent and “naive” and “sophisticated” time-inconsistent agents, and provide counterfactual policy simulations.

Please sign up for meetings using the schedule below:
docs.google.com/spreadsheets/d/1RGiVMwMBw0NPXh9BF6ooO6HJA1J56wqf_en2deCi-ZY/edit#gid=0
Date: 22 November 2018, 16:30 (Thursday, 7th week, Michaelmas 2018)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Christian Michel (Barcelona Graduate School of Economics)
Organising department: Department of Economics
Part of: Applied Microeconomics Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Melis Clark