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Debiasing or rebiasing? Moderating the illusion of delayed incentives

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  • Soman, Dilip
  • Liu, Maggie Wenjing

Abstract

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.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:joepsy:v:32:y:2011:i:3:p:307-316
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    References listed on IDEAS

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    1. Soman, Dilip, 2004. "The effect of time delay on multi-attribute choice," Journal of Economic Psychology, Elsevier, vol. 25(2), pages 153-175, April.
    2. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
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    4. Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
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    8. 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.
    9. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    10. Gonzalez-Vallejo, Claudia & Moran, Elizabeth, 2001. "The Evaluability Hypothesis Revisited: Joint and Separate Evaluation Preference Reversal as a Function of Attribute Importance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 86(2), pages 216-233, November.
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