INSTITUTE FOR

the large shipment of another friend who was returning to the U.S. at the same time as
myself.
The preceding story can be represented mathematically in the following way. The box
was left with me on day 0. At the end of the year, at d:kte T, the box could be costlessly
transported. The cost of sending the box on any day prior to T
was estimated at c, the
value of a day's work. I estimated Joe's valuation of the use of the contents of the box
(which was the same as my value of his use of the contents) at a rate of x dollars per day. I
saw no reason to attach any discount rate to his use of the box. However, each day when I
awoke, the activities I would perform if I did not mail off the Stiglitz box seemed important
and pressing, whereas those I would undertake several days hence remained vague and
seemed less vivid. I thus overvalued the cost of sending the box on the current day relative
to any future day by a factor of 5. This caused me to 'rocrastinate.
On each day t, until date T - c/x, I made the dynamically inconsistent decision that I
would not send the box on that day, but would instead send it the very next day. Ultimately, I
decided to simply wait and send it costlessly at my departure.
Consider my decision process. On each day t, I awoke and made a plan to send the box
on date t*. I chose t* to minimize V, the costs net of the benefits of sending the box.
If I sent the box on that day--day t-- V would be
(1) V=c(l +5)-(T-t*)x for t*= t.
The factor 5 represents the extra salience of sending the box on that day. If I waited, but
sent the box at some later time, other than the time of my departure, V would be
(2) V=c-(T-t*)x for t+l_ t*