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IX. Conclusion Standard economic analysis is based upon the Benthamite view that individuals have fixed utilities which do not change. Stigler and Becker and Becker and Murphy have gone so far as to posit that these utilities do change, but that individuals are forward-looking and thus foresee the changes that will occur. A more modem view of behavior, based on Twentieth Century anthropology, psychology and sociology is that individupls have utilities which do change and, in addition, they fail fully to foresee those changes or even recognize that they have occurred. This lecture has modelled such behavior in sequences of decisions, given examples from every day life, indicated the situations in which such behavior is likely to occur and, in some instances, suggested possible remedies. The theory of procrastination and obedience has applications to savings, crime, substance abuse, politics and bureaucratic organizations. 31
ENDNOTES 1. The exact loss is Tx - c(1 + 8). If I sent the box on date 0 V has value c(1 +8)- Tx. Since I sent the box at T, V=O. The difference is Tx - c(1 + 5). 2. The exact critical date is the first day on which the decision maker decides not to postpone: i.e. the smallest t such that c - (T - t + 1)x < 0. 3. Let us suppose that the daily utility cost of doing a project varies with the square of the number of hours worked per day, and that the project, without procrastination, would require Th hours of labor. Let us suppose that the daily utility cost of doing a project varies with the square of the number of hours worked per day, and that the project, without procrastination, would require Th hours of labor. Then we can write the intertemporal utility function as T U = 7 e, 2 . t=0 where e is the number of hours worked on day t. Without procrastination the total utility cost of the project is U = Th 2 . Let's now compare this to the cost borne by a procrastinator. For the procrastinator current costs are unduly salient in comparison with future costs. The salience premium is 5h', a multiple 8 of the daily cost of the project if begun on time. The perceived cost of completing the project, if begun at date t, is thus: T V= 8h 2 + 7, e, . t=t 32
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