IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-00807423.html
   My bibliography  Save this paper

The Importance of the Cognitive Environment for Intertemporal Choice

Author

Listed:
  • Michael A. Kuhn

    (Department of Economics - UC San Diego - University of California [San Diego])

  • Peter Kuhn

    (Department of Economics, University of California - University of California [Santa Barbara])

  • Marie Claire Villeval

    () (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Abstract

We experimentally manipulate two aspects of the cognitive environment -- cognitive depletion and recent sugar intake -- and estimate their effects on individuals' time preferences in a way that allows us to identify the structural parameters of a simple (α,β,δ) intertemporal utility function for each person. We find that individuals exposed to a prior cognitive load, individuals who consumed a sugared drink and individuals who consumed a sugar-free drink all defer more income than a control group exposed to none of these conditions. Structural estimates show that all three effects are driven entirely by increases in the intertemporal substitution elasticity parameter (α). Together, our results suggest that at least for complex economic decisions like intertemporal financial choice, the 'attention/focusing' effect of both prior cognitively demanding activity and prior assignment of a primary reward can improve decision-making.

Suggested Citation

  • Michael A. Kuhn & Peter Kuhn & Marie Claire Villeval, 2013. "The Importance of the Cognitive Environment for Intertemporal Choice," Working Papers halshs-00807423, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00807423
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00807423
    as

    Download full text from publisher

    File URL: https://halshs.archives-ouvertes.fr/halshs-00807423/document
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Emre Ozdenoren & Stephen W. Salant & Dan Silverman, 2012. "Willpower And The Optimal Control Of Visceral Urges," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 342-368, April.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2010. "Are Risk Aversion and Impatience Related to Cognitive Ability?," American Economic Review, American Economic Association, vol. 100(3), pages 1238-1260, June.
    3. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    4. 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.
    5. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2012. "Testing for Altruism and Social Pressure in Charitable Giving," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 1-56.
    6. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    7. Burger, Nicholas & Charness, Gary & Lynham, John, 2011. "Field and online experiments on self-control," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 393-404, March.
    8. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    9. Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, May.
    10. James Andreoni & Charles Sprenger, 2012. "Estimating Time Preferences from Convex Budgets," American Economic Review, American Economic Association, vol. 102(7), pages 3333-3356, December.
    11. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
    12. John Ifcher & Homa Zarghamee, 2011. "Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment," American Economic Review, American Economic Association, vol. 101(7), pages 3109-3129, December.
    13. Mead, N.L. & Baumeister, R.F. & Gino, F. & Schweitzer, M.E. & Ariely, D., 2009. "Too tired to tell the truth : Self-control resource depletion and dishonesty," Other publications TiSEM c60167a3-c3aa-4b83-9192-1, Tilburg University, School of Economics and Management.
    14. Dickinson, David L. & McElroy, Todd, 2010. "Rationality around the clock: Sleep and time-of-day effects on guessing game responses," Economics Letters, Elsevier, vol. 108(2), pages 245-248, August.
    15. Bucciol, Alessandro & Houser, Daniel & Piovesan, Marco, 2011. "Temptation and productivity: A field experiment with children," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 126-136.
    16. James Andreoni & Michael A. Kuhn & Charles Sprenger, 2013. "On Measuring Time Preferences," NBER Working Papers 19392, National Bureau of Economic Research, Inc.
    17. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    18. James Andreoni & Charles Sprenger, 2012. "Risk Preferences Are Not Time Preferences," American Economic Review, American Economic Association, vol. 102(7), pages 3357-3376, December.
    19. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2013. "Simplification and saving," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 130-145.
    20. Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013. "Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1231-1255, December.
    21. Ryder, Harl E., 1985. "Heterogeneous time preferences and the distribution of wealth," Mathematical Social Sciences, Elsevier, vol. 9(1), pages 63-76, February.
    22. Carvalho, Leandro S. & Prina, Silvia & Sydnor, Justin, 2016. "The effect of saving on risk attitudes and intertemporal choices," Journal of Development Economics, Elsevier, vol. 120(C), pages 41-52.
    23. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    24. repec:feb:framed:0087 is not listed on IDEAS
    25. Alessandro Bucciol & Daniel Houser & Marco Piovesan, 2011. "Temptation at work," Harvard Business School Working Papers 11-090, Harvard Business School.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Todd McElroy & David L. Dickinson & Nathan Stroh, 2013. "The impact of glucose administration on Bayesian v. heuristic based choice," Working Papers 13-18, Department of Economics, Appalachian State University.

    More about this item

    Keywords

    Time preferences; self-control; depletion; sucrose; experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00807423. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.