Scheduling with present bias

The study of time‐inconsistent decision‐making, in particular present bias, has greatly influenced the field of behavioral economics over the last two decades. Moreover, it has resulted in the design and implementation of widely used incentive schemes for various important applications. However, the effect of present bias on decision‐making for operational problems has been studied less. This work considers the effect of present bias in a simple scheduling system that requires decisions about project timing and sequencing. We design algorithms that enable optimization of revenue less cost under present bias for both naive and sophisticated (i.e., self‐aware) decision‐makers. We describe managerial insights about the relative performance of time‐consistent, naive, and sophisticated decision‐makers, and how to mitigate the effects of present bias. Both theoretical and computational results support these insights.

• 저널Production and Operations Management · 32(6) · 1743–1759
• 토픽Capital Investment and Risk Analysis · Finance
• DOI10.1111/poms.13937
• 저자Nicholas G. Hall, Zhixin Liu