Complete Description:We develop and test a simple model of limited attention in intertemporal choice. The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictions that overlap with other models of present-bias. Our model also generates the unique predictions that reminders will increase saving, and that a reminder that makes a specific expenditure more salient will be especially effective. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.
Date Published:Thursday, April 1, 2010
Author:Dean Karlan, Margaret McConnell, Sendhil Mullainathan, and Jonathan Zinman
Funding Agency: Social Security Administration