The Allocation of Time in Decision-Making

Dmitry Taubinsky, Carrie L. Morris, Jonathan P. Schuldt, Christopher F Chabris and David Laibson

Scholarly Articles from Harvard University Department of Economics

Abstract: We study the allocation of time across decision problems. If a decision-maker (1) has noisy estimates of value, (2) improves those estimates the longer he or she analyzes a choice problem, and (3) allocates time optimally, then the decision-maker should spend less time choosing when the difference in value between two options is relatively large. To test this prediction we ask subjects to make 27 binary incentive-compatible intertemporal choices, and measure response time for each decision. Our time allocation model explains 54% of the variance in average decision time. These results support the view that decisionmaking is a cognitively costly activity that uses time as an input allocated according to cost-benefit principles.

Date: 2009
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Citations: View citations in EconPapers (44)

Published in Journal- European Economic Association

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