Debiasing or rebiasing? Moderating the illusion of delayed incentives
This paper studies corrective strategies for the illusion of delayed incentives (Soman, 1998), the phenomena that money-for-effort transactions that are unattractive in the present appear attractive when they are in the future. This illusion occurs because future effort is discounted more heavily than future monetary outcomes. In this research, we show that this bias of differential discounting can be corrected by asking consumers to perform effort at the time of decision-making. We further outline three explanations for why this intervention attenuates the illusion of delayed incentives, and discuss whether these explanations constitute a debiasing effect or a rebiasing effect (Larrick, 2004). We report the results of two laboratory experiments and discuss theoretical and practical implications of our findings.
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- Soman, Dilip, 2004. "The effect of time delay on multi-attribute choice," Journal of Economic Psychology, Elsevier, vol. 25(2), pages 153-175, April.
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- Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
- Terrance Odean, 1999. "Do Investors Trade Too Much?," American Economic Review, American Economic Association, vol. 89(5), pages 1279-1298, December.
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