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Towards an incentive salience model of intertemporal choice

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  • Lades, Leonhard K.

Abstract

This theoretical paper presents an incentive salience model of intertemporal choice. The model is a variation of the quasi-hyperbolic discounting model. Based on the distinction between ‘wanting’ and ‘liking’, the paper presents one possible explanation of impulsive choices of smaller sooner rewards instead of larger later ones. These impulsive choices are induced by cues that trigger strong motivational ‘wanting’ to obtain smaller sooner rewards, but do not necessarily influence the degree to which the rewards are ‘liked’. Cue-triggered ‘wanting’ can occur when an individual is in a specific need deprivation state, perceives a cue previously associated with an immediately obtainable reward, knows that the cued reward can reduce the current deprivation state, and lacks self-control. Attributable to the integration of cue-triggered ‘wanting’ into an intertemporal choice model, the incentive salience can account for anomalies in intertemporal choice such as present-biased preferences and the domain effect.

Suggested Citation

  • Lades, Leonhard K., 2012. "Towards an incentive salience model of intertemporal choice," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 833-841.
  • Handle: RePEc:eee:joepsy:v:33:y:2012:i:4:p:833-841
    DOI: 10.1016/j.joep.2012.03.007
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    References listed on IDEAS

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    Cited by:

    1. Martin Binder & Leonhard K. Lades, 2015. "Autonomy-Enhancing Paternalism," Kyklos, Wiley Blackwell, vol. 68(1), pages 3-27, February.
    2. Witt, Ulrich & Binder, Martin, 2013. "Disentangling motivational and experiential aspects of “utility” – A neuroeconomics perspective," Journal of Economic Psychology, Elsevier, vol. 36(C), pages 27-40.
    3. Lades, Leonhard K., 2014. "Impulsive consumption and reflexive thought: Nudging ethical consumer behavior," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 114-128.
    4. Binder, Martin & Lades, Leonhard K, 2014. "Autonomy-enhancing paternalism," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-02, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Ulrich Witt, 2017. "The evolution of consumption and its welfare effects," Journal of Evolutionary Economics, Springer, vol. 27(2), pages 273-293, April.

    More about this item

    Keywords

    Intertemporal consumer choice; Impulsivity; ‘Wanting’ versus ‘liking’;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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