Time Discounting: Declining Impatience and Interval Effect

Most studies have not distinguished delay from intervals, so that whether the declining impatience really holds has been an open question. We conducted an experiment that explicitly distinguishes them, and confirmed the declining impatience. This implies that people make dynamically inconsistent plans. We also found the interval effect that the per-period time discount rate decreases with prolonged intervals. We show that the interval and the magnitude effects are caused, at least partially, because subjects' choices are influenced by the differential in reward amount, while Weber's law solves neither the delay nor the interval effects.

Overconfidence Increases Productivity

Recent studies report that productivity increases under tournament reward structures than under piece rate reward structures. We conduct maze-solving experiments under both reward structures and reveal that overconfidence is a significant factor in increasing productivity. Specifically, subjects exhibiting progressively higher degrees of overconfidence solve more mazes. This result shows a positive aspect of overconfidence, which usually has been examined in its negative aspect as an expectation bias.

Differential in Risky Asset Ratios between the United States and Japan

The ratio of risky assets to wealth is much lower in Japan than in the US. The purpose　of this paper is to elucidate the cause of the differential in the risky asset ratios between　the two countries using a household survey. Estimating the relative risk tolerance and　demand functions for risky assets reveal that the risk tolerance hypothesis that the cause　is the differential in the risk tolerance was rejected. This study also found that a large　part of the differential in the risky asset ratios depended on factors that have not beenexplicitly considered in previous studies.JEL Classification: D81; G1