The importance of the cognitive environment for intertemporal choice

Arbeitspapier

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 price 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7273

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Micro-Based Behavioral Economics: General‡
• Subject: time preferences ; self-control ; depletion ; sucrose ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kuhn, Michael A. ; Kuhn, Peter Joseph ; Villeval, Marie-Claire
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/71736
• Last update: 10.03.2025, 11:45 AM CET