Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions

45 Pages Posted: 12 Oct 2010 Last revised: 2 Jun 2023

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Yang Wang

Lafayette College

Multiple version iconThere are 2 versions of this paper

Date Written: October 2010

Abstract

We extend the semi-parametric estimation method for dynamic discrete choice models using Hotz and Miller's (1993) conditional choice probability (CCP) approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We illustrate the proposed estimation method with an empirical application of adult women's decisions to undertake mammography to evaluate the importance of present bias and naivety in the under-utilization of this preventive health care. Our results show evidence for both present bias and naivety.

Suggested Citation

Fang, Hanming and Wang, Yang, Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions (October 2010). NBER Working Paper No. w16438, Available at SSRN: https://ssrn.com/abstract=1689370

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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National Bureau of Economic Research (NBER)

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Yang Wang

Lafayette College ( email )

Easton, PA 18042
United States
610-330-5298 (Phone)
610-330-5715 (Fax)

HOME PAGE: http://economics.lafayette.edu/

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