This paper axiomatizes a recursive utility model that captures both intertemporal utility smoothing defined across time and ambiguity aversion defined over states. The resulting representation adapts Wakai model of intertemporal utility smoothing as an aggregator function, where the utility of the certainty equivalent of future uncertainty is computed by Gilboa and Schmeidler multiple-priors utility. The model also permits the separation of intertemporal utility smoothing from ambiguity aversion.

We conduct an experiment to investigate the degree to which deviations from exponential discounting can be accounted for by the hypothesis of hyperbolic discounting. Subjects are asked to choose between an earlier or later payoff in a series of 40 choice questions. Each question consists of a pair of monetary amounts determined by compounding a given base amount at a constant rate per period. Two bases (8 and 20 dollars), three compounding rates (low, medium and high) and three delays (2, (...) 4, and 6 weeks) are each used. There are also 2 initial periods (Today and 2 weeks) and there are two separate questionnaires, one with lower “realistic” compounding rates and the other with higher compounding rates, typical of those used in previous studies. We analyze the detailed patterns of choice in 6 groups of 6 related questions each (in which the base and rate is fixed but the initial period and delay varies), documenting the frequency of patterns consistent with exponential discounting and with hyperbolic discounting. We find that exponential discounting is the clear modal choice pattern in virtually all cases. Hyperbolic discounting is never the modal pattern (except in the sense that constant discounting is a special case of hyperbolic discounting). We also estimate a linear probability model that takes account of individual heterogeneity. The estimates show substantial increases in the probability of choosing the later option when the compounding rate increases, as one would expect. There are small, sometimes significant, increases in this probability when the delay is increased or the initial period is in the future. Such behavior is consistent with hyperbolic discounting, but can account for only a small proportion of choices. Overall, deviations from exponential discounting appear to be due to error, or to other effects not accounted for by hyperbolic discounting. Principal among these is an increase in later choices when the base is larger. (shrink)

This paper proposes a novel account of why intertemporal decisions tend to display impatience: People pay more attention to the opportunity costs of choosing larger, later rewards than to the opportunity costs of choosing smaller, sooner ones. Eight studies show that when the opportunity costs of choosing smaller, sooner rewards are subtly highlighted, people become more patient, whereas highlighting the opportunity costs of choosing larger, later rewards has no effect. This pattern is robust to variations in the choice task, to (...) the participant population, and is observed for both incentivized and hypothetical choices. We argue that people are naturally aware of the opportunity costs associated with delayed rewards, but pay less attention to those associated with taking smaller, sooner ones. We conclude by discussing implications for theory and policy. (shrink)

Lapses in ethical conduct by those in corporate and public authority worldwide have given business researchers and practitioners alike cause to re-examine the antecedents to personal ethical values. We explore the relationship between ethical values and an individual’s long-term orientation or LTO, defined as the degree to which one plans for and considers the future, as well as values traditions of the past. Our study also examines the role of work ethic and conservative attitudes in the formation of a person’s (...) long-term orientation and consequent ethical beliefs. Empirically testing these hypothesized relationships using data from 292 subjects, we find that long-term perspectives on tradition and planning indeed engender higher levels of ethical values. The results also support work ethic’s role in fostering tradition and planning, as well as conservatism’s positive association with planning. Additionally, we report how tradition and planning mediate the influence of conservatism and work ethic on the formation of ethical values. Limitations of the study and future research directions, as well as implications for business managers and academics, are also discussed. (shrink)

We formulate and investigate experimentally a model of how individuals choose between time sequences of monetary outcomes. The model assumes that a decision maker uses, sequentially, two criteria to screen options. Each criterion only permits a decision between some pairs of options, while the other options are incomparable according to that criterion. When the first criterion is not decisive, the decision maker resorts to the second criterion to select an alternative. We find that: (1) traditional economic models based on discounting (...) alone cannot explain a significant (almost 30%) proportion of the data no matter how much variability in the discount functions is allowed; (2) our model, despite considering only a specific (exponential) form of discounting, can explain the data much better solely thanks to the use of the secondary criterion; (3) our model explains certain specific patterns in the choices of the “irrational” people. We reject the hypothesis that anomalous behavior is due simply to random “mistakes” around the basic predictions of discounting theories: deviations are not random and there are clear systematic patterns of association between “irrational” choices. (shrink)

Behavioural spillovers refer to the influence that a given intervention targeting behaviour 1 exerts on a subsequent, non-targeted, behaviour 2, which may or may not be in the same domain (health, finance etc.) as one another. So, a nudge to exercise more, for example, could lead people to eat more or less, or possibly even to give more or less to charity depending on the nature of the spillover. But what if spillovers also operate backwards; that is, if the expectation (...) of behaviour 1 influences behaviour 0 that precedes it? For example, a person may form an intention to exercise prompted by a policy intervention but overeat at present as a result. We define such a possibility as a "spillunder". In the proposed article, we critically review the few papers that we have identified through a narrative literature review which have demonstrated spillunder effects to date, and we propose a conceptual framework. Based on evidence about the human mind and behaviour from psychology and economics, we argue that spillunder effects may be more common than the limited empirical findings suggest. We propose six representative mechanisms through which the prospect of behaviour 1 may impact behaviour 0: executive functions, moral licensing and moral cleansing, emotion regulation, energization, construal level, and savouring and dread. We further discuss the policy and practical implications of spillunder effects and examine methodological issues that need to be considered when empirically testing these effects. As with our earlier paper on spillovers, we aim to motivate other behavioural scientists to research behavioural spillunders more systematically and extensively, and to prompt decision makers to consider these effects when designing behavioural interventions. (shrink)

This article reviews existing empirical research on the peak-and-end rule. This rule states that people's global evaluations of past affective episodes can be well predicted by the affect experienced during just two moments: the moment of peak affect intensity and the ending. One consequence of the peak-and-end rule is that the duration of affective episodes is largely neglected. Evidence supporting the peak-and-end rule is robust, but qualified. New directions for future work in this emerging area of study are outlined. In (...) particular, the personal meanings associated with specific moments and with specific emotions should be assessed. It is hypothesised that moments rich with self-relevant information will dominate people's global evaluations of past affective episodes. The article concludes with a discussion of ways to measure and optimise objective happiness. (shrink)

There is a need to consider the impact of the new resident-hours regulations on the variety of aspects of medical education and patient care. Most existing literature about this subject has focused on the role of fatigue in resident performance, education, and health care delivery. However, there are other possible consequences of these new regulations, including a negative impact on decision ownership. Our main assumption of is that increased shift work in medicine can decrease ownership of treatment decisions and impact (...) negatively on quality of care. We review some potential components of decision ownership in treatment context and suggest possible ways in which the absence of decision ownership may decrease the quality of medical decision making. The article opens with the definition of decision ownership and the overview of some contextual factors that may contribute to the development of ownership in medical residency. The following section discusses decision ownership in medical care from the perspe... (shrink)

Cognitive scientists have identified a wide range of biases and heuristics in human decision making over the past few decades. Only recently have bioethicists begun to think seriously about the implications of these findings for topics such as agency, autonomy, and consent. This article aims to provide an overview of biases and heuristics that have been identified and a framework in which to think comprehensively about the impact of them on the exercise of autonomous decision making. I analyze the impact (...) that these biases and heuristics have on the following dimensions of autonomy: understanding, intentionality, absence of alienating or controlling influence, and match between formally autonomous preferences or decisions and actual choices or actions. (shrink)

The problem of intertemporal choice arises when outcomes are received in different moments of time. This paper presents an axiomatic model of intertemporal choice when consumption in the previous moment of time contributes to utility evaluation of consumption in the current moment. This model generalizes classic discounted utility theory (also known as constant or exponential discounting) in two ways. First, in every moment of time, a decision maker derives utility not only from current consumption but also from “residual” consumption in (...) the previous moment of time. Second, these utilities are discounted with weights that are essentially a quasi-hyperbolic discounting function. The paper presents an application of the proposed model to the problem of optimal consumption and savings given a fixed income (wealth). When a decision maker derives satisfaction from both instantaneous consumption as well as a share of consumption in the previous moment of time, optimal consumption path is cyclic—periods of relatively high consumption are interchanged with periods of relatively low consumption. These cycles decay over time. Asymptotically, the consumption path exhibits conventional properties (constant, increasing or decreasing over time when a gross interest rate multiplied by discount factor is correspondingly equal to, greater than, or less than one). (shrink)

The empirically documented fact is that people’s preferences are time -biased. The main aim of this paper is to analyse in which sense do time -biases violate the requirements of rationality, as many authors assume. I will demonstrate that contrary to many influential views in psychology, economy and philosophy it is very difficult to find why the bias toward the near violates the requirements rationality. I will also show why the bias toward the future violates the requirements of rationality in (...) a very basic sense. (shrink)