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Identifying Present-Biased Discount Functions in Dynamic Discrete Choice Models

Jaap H. Abbring, Øystein Daljord, Fedor Iskhakov

arXiv 9 Jul 2025 · Econometrics

arXiv:2507.07286 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We study the identification of dynamic discrete choice models with sophisticated, quasi-hyperbolic time preferences under exclusion restrictions. We consider both standard finite horizon problems and empirically useful infinite horizon ones, which we prove to always have solutions. We reduce identification to finding the present-bias and standard discount factors that solve a system of polynomial equations with coefficients determined by the data and use this to bound the cardinality of the identified set. The discount factors are usually identified, but hard to precisely estimate, because exclusion restrictions do not capture the defining feature of present bias, preference reversals, well.

Citation extraction

35
references
74
in-text mentions
35
distinct cited
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main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Fang, H. and Y. Wang (2015) Estimating dynamic discrete choice models with hyperbolic discounting, with an application to mammography decisions1.000143100%
2Abbring, J. H. and . Daljord (2020b, May) (2020) Identifying the discount factor in dynamic discrete choice models self1.00093100%
3Daljord, O. y., J.-P. Dubé, and X. Kong (2020) State dependence in scanner data0.69361100%
4Chan, M (2017) Welfare dependence and self-control: An empirical analysis0.64441100%
5Mahajan, A., C. Michel, and A. Tarozzi (2019) Identification of time-inconsistent models: The case of insecticide treated nets0.64441100%
6Cox, D., J. Little, and D. O'Shea (2015) Ideals, Varieties, and Algorithms0.58531100%
7Magnac, T. and D. Thesmar (2002) Identifying dynamic discrete choice processes0.58531100%
8Dubé, J.-P., G. J. Hitsch, and P. E. Rossi (2010) State dependence and alternative explanations for consumer inertia0.51121100%
9Peeters, R. (2004, February) (2004) Stochastic games with hyperbolic discounting0.51121100%
10Thaler, R (1981) Some empirical evidence on dynamic inconsistency0.51121100%

Showing the top 10 of 35 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Identifying Dynamic Discrete Choice Models with Hyperbolic Discounting0.51121
2Identifying the Discount Factor in Dynamic Discrete Choice Models0.40511
3A Comment on “Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting” by Hanming Fang and Yang Wang0.40511