Highbrow Films Gather Dust: A Study of Dynamic Inconsistency and Online DVD Rentals
AbstractWe report on a field study demonstrating systematic differences between the preferences people anticipate they will have over a series of options in the future and their subsequent revealed preferences over those options. Using a novel panel data set, we analyze the film rental and return patterns of a sample of online DVD rental customers over a period of four months. We predict and find that people are more likely to rent DVDs in one order and return them in the reverse order when should DVDs (e.g., documentaries) are rented before want DVDs (e.g., action films). This effect is sizeable in magnitude, with a 2% increase in the probability of a reversal in preferences (from a baseline rate of 12%) ensuing if the first of two sequentially rented movies has more should and fewer want characteristics than the second film. Similarly, we also predict and find that should DVDs are held significantly longer than want DVDs within-customer. Finally, we find that as the same customers gain more experience with online DVD rentals, their "dynamic inconsistency" is attenuated. We interpret our results as evidence that myopia has a meaningful impact on decisions in the field and that people learn about their myopia with experience, allowing them to curb its influence.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Harvard Business School in its series Harvard Business School Working Papers with number 07-099.
Length: 34 pages
Date of creation: Jun 2007
Date of revision: Apr 2008
want/should; intrapersonal conflict; dynamic inconsistency; myopia;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-29 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Read, Daniel & van Leeuwen, Barbara, 1998. "Predicting Hunger: The Effects of Appetite and Delay on Choice, , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 189-205, November.
- Thaler, Richard H & Shefrin, H M, 1981.
"An Economic Theory of Self-Control,"
Journal of Political Economy,
University of Chicago Press, vol. 89(2), pages 392-406, April.
- Klaus Wertenbroch, 1998. "Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice," Marketing Science, INFORMS, vol. 17(4), pages 317-337.
- Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
- Nava Ashraf & Dean S. Karlan & Wesley Yin, 2005.
"Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines,"
917, Economic Growth Center, Yale University.
- Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 635-672, May.
- Nava Ashaf & Dean Karlan & Wesley Yin, 2004. "Tying odysseus to the mast: Evidence from a commitment savings product in the philippines," Natural Field Experiments 00206, The Field Experiments Website.
- O'Donoghue, Ted & Rabin, Matthew, 1997.
"Doing It Now or Later,"
Department of Economics, Working Paper Series
qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
- Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Rogers, Todd & Bazerman, Max H., 2008. "Future lock-in: Future implementation increases selection of 'should' choices," Organizational Behavior and Human Decision Processes, Elsevier, vol. 106(1), pages 1-20, May.
- Oster Sharon M. & Scott Morton Fiona M., 2005. "Behavioral Biases Meet the Market: The Case of Magazine Subscription Prices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-32, March.
- Loewenstein, George, 1996. "Out of Control: Visceral Influences on Behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 65(3), pages 272-292, March.
- Stefano DellaVigna & Ulrike Malmendier, 2006. "Paying Not to Go to the Gym," American Economic Review, American Economic Association, vol. 96(3), pages 694-719, June.
- George-Marios Angeletos, 2001. "The Hyberbolic Consumption Model: Calibration, Simulation, and Empirical Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 47-68, Summer.
- David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
- Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May.
- Katherine Lyford Milkman & Dolly Chugh & Max H. Bazerman, 2008. "How Can Decision Making Be Improved?," Harvard Business School Working Papers 08-102, Harvard Business School, revised Jul 2008.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Soebagio Notosoehardjo).
If references are entirely missing, you can add them using this form.