An extended survey on time-inconsistency and its applications

Abstract

In this study, we provide an extended literature review on preferences with present bias, more specifically with quasi-hyperbolic discounting which leads to time-inconsistent behavior. We review current studies that focus on the implications of time-inconsistent preferences on various well-known economic models and environments, including both models of individual decision making and models that have strategic interactions. We also discuss the part of the literature that focuses on measuring the discounting, whether it is exponential or hyperbolic. We also provide possible research directions which have not been fully explored yet in the literature.