Inconsistent time preferences and on-the-job search: When it pays to be naive

We study optimal employment contracts for present-biased employees who can conduct on-the-job search. Presuming that fims cannot offer long-term contracts, we find that individuals who are naive about their present bias will actually be better off than sophisticated or time-consistent individuals. Moreover, they search more, which partially counteracts the ineffciencies caused by their present bias.

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Year of publication:	2019
Authors:	Fahn, Matthias ; Seibel, Regina
Publisher:	Linz : Johannes Kepler University of Linz, Department of Economics
Subject:	Present bias \| on-the-job search

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Series:	Working Paper ; 1909
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	1663463891 [GVK] hdl:10419/207122 [Handle]
Classification:	D21 - Firm Behavior ; D83 - Search, Learning, Information and Knowledge ; D90 - Intertemporal Choice and Growth. General ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc ; J32 - Nonwage Labor Costs and Benefits; Private Pensions
Source:	EconStor

Persistent link: https://www.econbiz.de/10012140932