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Evolution of similarity judgements in intertemporal choice

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  • Fabrizio Adriani

    ()
    (School of Economics, University of Leicester)

  • Silvia Sonderegger

    ()
    (Department of Economics, University of Nottingham)

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    Abstract

    We study Nature's trade-off when endowing people with the cognitive ability to distinguish between different time periods or different prizes. Our key premise is that cognitive ability is a scarce resource, to be deployed only where and when it really matters. We show that this simple insight can explain a number of observed anomalies: (i) time preference reversal, (ii) magnitude effects, (iii) cycles, (iv) interval length effects. An implication of our analysis is that, from an evolutionary perspective, people may be suffering from too much tendency to postpone (rather than to anticipate) consumption, turning upside-down existing interpretations of preference reversal.

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    Bibliographic Info

    Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2014-06.

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    Handle: RePEc:not:notcdx:2014-06

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    Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
    Phone: (44) 0115 951 5620
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    Web page: http://www.nottingham.ac.uk/economics/cedex/
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    Keywords: Foundations of preferences; intertemporal choice; similarity judgments;

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