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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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 |
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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 |
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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. |
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JANG, Minkwang URMINSKY, Oleg |
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JANG, Minkwang URMINSKY, Oleg |
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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 |
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Institutional Knowledge at Singapore Management University |
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2023 |
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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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