Present-Biased Optimization
This research provides a more complete understanding of time-inconsistent planning for economists and behavioral scientists by quantifying the impact of present bias across various optimization problems.
This paper extends a framework for analyzing present-biased agents, who misestimate future action costs. It differentiates agent behavior based on optimization tasks (e.g., covering vs. hitting) and explores all four combinations of minimization/maximization with underestimation/overestimation, establishing upper bounds on cost ratios for three scenarios.
This paper explores the behavior of present-biased agents, that is, agents who erroneously anticipate the costs of future actions compared to their real costs. Specifically, the paper extends the original framework proposed by Akerlof (1991) for studying various aspects of human behavior related to time-inconsistent planning, including procrastination, and abandonment, as well as the elegant graph-theoretic model encapsulating this framework recently proposed by Kleinberg and Oren (2014). The benefit of this extension is twofold. First, it enables to perform fine grained analysis of the behavior of present-biased agents depending on the optimisation task they have to perform. In particular, we study covering tasks vs. hitting tasks, and show that the ratio between the cost of the solutions computed by present-biased agents and the cost of the optimal solutions may differ significantly depending on the problem constraints. Second, our extension enables to study not only underestimation of future costs, coupled with minimization problems, but also all combinations of minimization/maximization, and underestimation/overestimation. We study the four scenarios, and we establish upper bounds on the cost ratio for three of them (the cost ratio for the original scenario was known to be unbounded), providing a complete global picture of the behavior of present-biased agents, as far as optimisation tasks are concerned.