Cross-period impatience: Subjective financial periods explain time-inconsistent choices

Inconsistency in consumer time preferences has been well established and used to explain seemingly short-sighted behaviors (e.g., failures of self-control). However, prior research has conflated time-inconsistent preferences (discount rates that vary over time) with present bias (greater discounting...

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Main Authors: JANG, Minkwang, URMINSKY, Oleg
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Language:English
Published: Institutional Knowledge at Singapore Management University 2023
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/7608
https://ink.library.smu.edu.sg/context/lkcsb_research/article/8607/viewcontent/CrossPeriodImpatience_av.pdf
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spelling sg-smu-ink.lkcsb_research-86072024-10-17T03:14:53Z Cross-period impatience: Subjective financial periods explain time-inconsistent choices JANG, Minkwang URMINSKY, Oleg Inconsistency in consumer time preferences has been well established and used to explain seemingly short-sighted behaviors (e.g., failures of self-control). However, prior research has conflated time-inconsistent preferences (discount rates that vary over time) with present bias (greater discounting when outcomes are delayed specifically from the present, as opposed to from a future time). This research shows that time-inconsistent preferences are reliably observed only when choices are substantially delayed (e.g., months into the future), which cannot be explained by present bias. This seeming puzzle is explained by a novel cross-period discounting framework, which predicts that consumers are more impatient when choosing between options occurring in different subjective financial periods. As a result, they display inconsistent time preferences and are less willing to wait for an equally delayed outcome specifically when a common delay to both options moves the larger-later option into a subsequent financial period. Six studies and multiple supplementary studies demonstrate that sensitivity to subjective financial periods accounts for time-inconsistent consumer preferences better than current models of time discounting based on present bias. 2023-12-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/7608 info:doi/10.1093/jcr/ucad029 https://ink.library.smu.edu.sg/context/lkcsb_research/article/8607/viewcontent/CrossPeriodImpatience_av.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University intertemporal choice time discounting categorization mental accounting budgeting impulsivity present bias Marketing Sales and Merchandising
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic intertemporal choice
time discounting
categorization
mental accounting
budgeting
impulsivity
present bias
Marketing
Sales and Merchandising
spellingShingle intertemporal choice
time discounting
categorization
mental accounting
budgeting
impulsivity
present bias
Marketing
Sales and Merchandising
JANG, Minkwang
URMINSKY, Oleg
Cross-period impatience: Subjective financial periods explain time-inconsistent choices
description Inconsistency in consumer time preferences has been well established and used to explain seemingly short-sighted behaviors (e.g., failures of self-control). However, prior research has conflated time-inconsistent preferences (discount rates that vary over time) with present bias (greater discounting when outcomes are delayed specifically from the present, as opposed to from a future time). This research shows that time-inconsistent preferences are reliably observed only when choices are substantially delayed (e.g., months into the future), which cannot be explained by present bias. This seeming puzzle is explained by a novel cross-period discounting framework, which predicts that consumers are more impatient when choosing between options occurring in different subjective financial periods. As a result, they display inconsistent time preferences and are less willing to wait for an equally delayed outcome specifically when a common delay to both options moves the larger-later option into a subsequent financial period. Six studies and multiple supplementary studies demonstrate that sensitivity to subjective financial periods accounts for time-inconsistent consumer preferences better than current models of time discounting based on present bias.
format text
author JANG, Minkwang
URMINSKY, Oleg
author_facet JANG, Minkwang
URMINSKY, Oleg
author_sort JANG, Minkwang
title Cross-period impatience: Subjective financial periods explain time-inconsistent choices
title_short Cross-period impatience: Subjective financial periods explain time-inconsistent choices
title_full Cross-period impatience: Subjective financial periods explain time-inconsistent choices
title_fullStr Cross-period impatience: Subjective financial periods explain time-inconsistent choices
title_full_unstemmed Cross-period impatience: Subjective financial periods explain time-inconsistent choices
title_sort cross-period impatience: subjective financial periods explain time-inconsistent choices
publisher Institutional Knowledge at Singapore Management University
publishDate 2023
url https://ink.library.smu.edu.sg/lkcsb_research/7608
https://ink.library.smu.edu.sg/context/lkcsb_research/article/8607/viewcontent/CrossPeriodImpatience_av.pdf
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