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Psychological construal of economic behavior

Author

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  • Leiser, David
  • Azar, Ofer H.
  • Hadar, Liat

Abstract

According to construal level theory (CLT) [Trope, Y., & Liberman, N. (2003). Temporal construal. Physical Review, 110, 403-421], psychological representation of information depends on "psychological distance", that is, on whether the relevant information refers to the near or distant psychological space. While CLT was originally developed to account for intertemporal choice, Trope and Liberman proposed that it could account for other dimensions of psychological distance such as social distance. We follow up on Trope and Liberman's proposal and demonstrate how CLT accounts for a wide range of economic behaviors such as predicting the choices of others, advice giving, saving for retirement, and the failure to annuitize assets at retirement. By explaining how CLT can account for these various economic behaviors and suggesting novel predictions, we hope to stimulate researchers to investigate further the role of psychological distance in economic behavior.

Suggested Citation

  • Leiser, David & Azar, Ofer H. & Hadar, Liat, 2008. "Psychological construal of economic behavior," Journal of Economic Psychology, Elsevier, vol. 29(5), pages 762-776, November.
  • Handle: RePEc:eee:joepsy:v:29:y:2008:i:5:p:762-776
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    References listed on IDEAS

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    Cited by:

    1. Soman, Dilip & Liu, Maggie Wenjing, 2011. "Debiasing or rebiasing? Moderating the illusion of delayed incentives," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 307-316, June.
    2. van Schie, Ron J.G. & Dellaert, Benedict G.C. & Donkers, Bas, 2015. "Promoting later planned retirement: Construal level intervention impact reverses with age," Journal of Economic Psychology, Elsevier, vol. 50(C), pages 124-131.
    3. Pizzi, Gabriele & Scarpi, Daniele & Marzocchi, Gian Luca, 2014. "Showing a tree to sell the forest: The impact of attribute- and alternative-based information presentation on consumers’ choices," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 41-51.
    4. Lakomaa, Erik, 2009. "The Municipal Takeover of the School System," SSE/EFI Working Paper Series in Business Administration 2011:2, Stockholm School of Economics, revised 08 May 2011.
    5. Crusius, Jan & van Horen, Femke & Mussweiler, Thomas, 2012. "Why process matters: A social cognition perspective on economic behavior," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 677-685.
    6. Savadori, Lucia & Mittone, Luigi, 2015. "Temporal distance reduces the attractiveness of p-bets compared to $-bets," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 26-38.
    7. Ivo Bischoff & Lars-H. Siemers, 2013. "Biased beliefs and retrospective voting: why democracies choose mediocre policies," Public Choice, Springer, vol. 156(1), pages 163-180, July.

    More about this item

    Keywords

    A12 D01 D14 D90 H55 3040 Behavioral economics Construal level theory Psychology and economics Behavioral decision making;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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