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Towards an Incentive Salience Model of Intertemporal Choice

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  • Leonhard K. Lades

Abstract

This theoretical paper presents an incentive salience model of intertemporal choice. The model is a variation of the quasi-hyperbolic discounting model. Based on the distinction between 'wanting' and 'liking', the paper presents one possible explanation of impulsive choices of smaller sooner rewards instead of larger later ones. These impulsive choices are induced by cues that trigger strong motivational 'wanting' to obtain smaller sooner rewards, but do not necessarily influence the degree to which the rewards are 'liked'. Cue-triggered 'wanting' can occur when an individual is in a specific need deprivation state, perceives a cue previously associated with an immediately obtainable reward, knows that the cued reward can reduce the current deprivation state, and lacks self-control. By integrating cue-triggered 'wanting' into an intertemporal choice model, the incentive salience model allows to predict which rewards elicit impulsive choices of smaller sooner rewards, thus offering an explanation for the domain effect.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2011-18.

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Length: 24 pages
Date of creation: 15 Dec 2011
Date of revision:
Handle: RePEc:esi:evopap:2011-18

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Keywords: Intertemporal Consumer Choice; Impulsivity; 'Wanting' versus 'Liking';

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References

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  1. George Loewenstein, Ted O'Donoghue and Matthew Rabin., 2000. "Projection Bias in Predicting Future Utility," Economics Working Papers E00-284, University of California at Berkeley.
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  13. Van den Bergh, Bram & Dewitte, Siegfried & Warlop, Luk, 2008. "Bikinis instigate generalized impatience in intertemporal choice," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/160908, Katholieke Universiteit Leuven.
  14. Diamond, Peter & Koszegi, Botond, 2003. "Quasi-hyperbolic discounting and retirement," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1839-1872, September.
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Cited by:
  1. Leonhard K. Lades, 2012. "Impulsive Consumption and Reflexive Thought: Nudging Ethical Consumer Behavior," Papers on Economics and Evolution 2012-03, Max Planck Institute of Economics, Evolutionary Economics Group.

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