We investigate how overconfidence and production technology interact to influence decision making. We show that increasing a production factor can make an overconfident agent worse off. Two effects drive this result. First, if the production factor is a complement with ability, then the...

There is considerable variation in retirement savings within income, age, and educational categories. Using a broad sample of the U.S. population, we elicit time preference parameters from a quasi-hyperbolic discounting model, and perceptions of exponential growth. We find that present bias...

We develop a model in which people experience standard consumption utility, as well as anticipatory utility defined as the weighted sum of independently anticipated consumption “episodes” or “dimensions”. The weights on these dimensions correspond to the attention that the person pays to...

Exponential-growth bias (EGB) is the tendency to neglect the power of compounding inter- est. A person with EGB will misperceive the intertemporal budget constraint, overestimating lifetime wealth and underestimating the differences in the cost of consumption across periods . We test four...