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Background ambiguity and intertemporal choice: An experimental study on the effect of summer vacation

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  • Jin, Miao
  • Li, Jian
  • Meng, Juanjuan
  • Sun, Jingwei

Abstract

This paper examines the role of background ambiguity in intertemporal choice. Using natural variation in background ambiguity from the uncertainty surrounding summer vacation and a within-subject difference-in-differences experimental design, we find that individuals tend to avoid allocating money to the summer period, leading to nonmonotonic changes in discount rates. To investigate the underlying mechanism, we exogenously increase summer planning efforts and find that this reduces perceived background ambiguity about summer and increases individuals' willingness to allocate money to that period. These findings suggest that background ambiguity plays an important role in shaping intertemporal preferences.

Suggested Citation

  • Jin, Miao & Li, Jian & Meng, Juanjuan & Sun, Jingwei, 2025. "Background ambiguity and intertemporal choice: An experimental study on the effect of summer vacation," China Economic Review, Elsevier, vol. 94(PB).
    • Handle: RePEc:eee:chieco:v:94:y:2025:i:pb:s1043951x25002329
    DOI: 10.1016/j.chieco.2025.102574
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    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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