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Influence of time delay on choice between gambles: Savoring the emotion

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  • Luigi Mittone

    ()

  • Lucia Savadori

    ()

Abstract

In two laboratory studies involving 285 undergraduate students presented with a one-shot real choice we observe a systematic influence of time delay on the preferences for two lotteries, equal in expected value, but different in the degree of probability and outcome. The more the outcome is postponed (2 weeks, 1 month, 3 months, 6 months), the more individuals prefer the lottery offering a higher value (400 Euro) but a lower probability (.02) compared to the one offering a lower value (14 Euro) but a higher probability (.60). We explain these findings assuming a savoring hypothesis according to which, for highly emotional events, individuals prefer to postpone the desirable outcome, enjoying the savoring experience of anticipating the future emotions. It also suggests that for decisions where uncertainty resolution is postponed in the future, people will underweight the probability and overweight the outcome.

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Bibliographic Info

Paper provided by Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number 0802.

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Date of creation: 2008
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Handle: RePEc:trn:utwpce:0802

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Keywords: intertemporal choice; time delay; time horizon; gambles; risk;

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  1. George F. Loewenstein, 1988. "Frames of Mind in Intertemporal Choice," Management Science, INFORMS, vol. 34(2), pages 200-214, February.
  2. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
  3. Kivetz, Ran & Simonson, Itamar, 2002. " Self-Control for the Righteous: Toward a Theory of Precommitment to Indulgence," Journal of Consumer Research, University of Chicago Press, vol. 29(2), pages 199-217, September.
  4. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  5. 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.
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