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Intertemporal Decision-Making with Endogenous Attention Costs

FUR XII. Luiss, Rome June, 26 th 2006. Intertemporal Decision-Making with Endogenous Attention Costs. Davide Dragone. DSE - University of Bologna dragone@spbo.unibo.it. What are rest-breaks ? What are they for?

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Intertemporal Decision-Making with Endogenous Attention Costs

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  1. FUR XII Luiss, Rome June, 26th 2006 Intertemporal Decision-Making with Endogenous Attention Costs Davide Dragone DSE - University of Bologna dragone@spbo.unibo.it

  2. What are rest-breaks? What are they for? • Rest-breaks useful for managing the accumulation of fatigue due to the exertion of prolonged effort over time • What kind of fatigue? Induced by paying attention to complex cognitive activities

  3. Being rested/tired/fatigued are not common concepts in the vocabulary of an economist • The closest economic concept is effort, generally treated in terms of preferences and incentives • e.g.: P/A literature • But little attention to the fact that, if exhausted, incentives can be not enough • Like a biker climbing a mountain …

  4. It is not just a matter of preferences… …but of constraints on the set of possible paths of behavior, endogenously given by previous actions.

  5. Goal of the paper • To present a simple theoretical model to study the role of the (endogenous) condition of fatigue on the behavior of an individual that exerts prolonged effort over time • Only one precedent (Ozdenoren, Salant, Silverman, 2006): on self-control • 2 extensions: • Environment: Multi-tasking and cognitive (over)load • Preferences: on the condition of rest/fatigue

  6. The Model An individual must exert a prolonged attention effort. • Exerting effort has two effects: • Positive and direct on utility • Negative and indirect: it induces fatigue • If exhausted, the individual cannot exert effort anymore The problem is solved by an external agency

  7. The problem x(t): attention effort, at time t s(t) : rest condition, at time t so : initial rest condition sbar : “holiday” rest condition f(x) : depletion, as a function of the exerted effort

  8. Basic model: Qualitative results

  9. Extension 1: Multi-tasking

  10. Multi-tasking (continued)

  11. Extension 2: Preference for rest

  12. To sum up • A model to focus on the accumulation of fatigue when a prolonged effort over time is required • Rest/fatigue can constrain the set of feasible behavioral paths, beyond motivations and preferences • Not an alternative approach, but complementary to the usual economic approach to intertemporal decision-making

  13. Extensions • To test the predictions for the multi-tasking and overload extension • To introduce goals to be achieved within a given time interval • To introduce habits: cycles

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