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The value of nothing : asymmetric attention to opportunity costs drives intertemporal decision making
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Read, Daniel, Olivola, C. Y. and Hardisty, D. (2017) The value of nothing : asymmetric attention to opportunity costs drives intertemporal decision making. Management Science, 63 (12). pp. 4277-4297. doi:10.1287/mnsc.2016.2547 ISSN 0025-1909.
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Official URL: https://doi.org/10.1287/mnsc.2016.2547
Abstract
This paper proposes a novel account of why intertemporal decisions tend to display impatience: People pay more attention to the opportunity costs of choosing larger, later rewards than to the opportunity costs of choosing smaller, sooner ones. Eight studies show that when the opportunity costs of choosing smaller, sooner rewards are subtly highlighted, people become more patient, whereas highlighting the opportunity costs of choosing larger, later rewards has no effect. This pattern is robust to variations in the choice task, to the participant population, and is observed for both incentivized and hypothetical choices. We argue that people are naturally aware of the opportunity costs associated with delayed rewards, but pay less attention to those associated with taking smaller, sooner ones. We conclude by discussing implications for theory and policy.
Item Type: | Journal Article | ||||||||
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Subjects: | B Philosophy. Psychology. Religion > B Philosophy (General) B Philosophy. Psychology. Religion > BF Psychology |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Delay discounting (Psychology) , Choice (Psychology), Preferences (Philosophy), Frames (Sociology) , Decision making | ||||||||
Journal or Publication Title: | Management Science | ||||||||
Publisher: | Institute for Operations Research and the Management Sciences (I N F O R M S) | ||||||||
ISSN: | 0025-1909 | ||||||||
Official Date: | December 2017 | ||||||||
Dates: |
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Volume: | 63 | ||||||||
Number: | 12 | ||||||||
Page Range: | pp. 4277-4297 | ||||||||
DOI: | 10.1287/mnsc.2016.2547 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||
Date of first compliant deposit: | 25 April 2017 | ||||||||
Date of first compliant Open Access: | 25 April 2017 | ||||||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC), Leverhulme Trust (LT) | ||||||||
Grant number: | ES/K002201/1 (ESRC), P2012-V-022 (LT) |
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