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The importance of the cognitive environment on intertemporal choice

Author

Listed:
  • Michael A. Kuhn

    (Department of Economics - UC San Diego - University of California [San Diego] - UC - University of California)

  • Peter Kuhn

    (Department of Economics, University of California - UC Santa Barbara - University of California [Santa Barbara] - UC - University of California)

  • Marie Claire Villeval

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We experimentally manipulate two aspects of the cognitive environment — cognitive depletion and recent sugar intake — and estimate their effects on individuals’ time preferences in a way that allows us to identify the structural parameters of a simple (α,β,δ) intertemporal utility function for each person. We find that individuals exposed to a prior cognitive load, individuals who consumed a sugared drink and individuals who consumed a sugar-free drink all defer more income than a control group exposed to none of these conditions. Structural estimates show that all three effects are driven entirely by increases in the intertemporal substitution elasticity parameter (α). Together, our results suggest that at least for complex economic decisions like intertemporal financial choice, the ‘attention/focusing’ effect of both prior cognitively demanding activity and prior assignment of a primary reward can improve decision-making.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michael A. Kuhn & Peter Kuhn & Marie Claire Villeval, 2013. "The importance of the cognitive environment on intertemporal choice," Post-Print halshs-00862656, HAL.
    • Handle: RePEc:hal:journl:halshs-00862656
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    1. Rachel Riley & suboptimal choice
      by chris dillow in Stumbling and Mumbling on 2013-04-05 17:35:14

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    1. Todd McElroy & David L. Dickinson & Nathan Stroh, 2013. "The impact of glucose administration on Bayesian v. heuristic based choice," Working Papers 13-18, Department of Economics, Appalachian State University.

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    More about this item

    Keywords

    Time preferences; self-control; depletion; sucrose; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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