Certainty and overconfidence in future preferences for food
Linda Thunstrom,
Jonas Nordström and
Jason Shogren
Journal of Economic Psychology, 2015, vol. 51, issue C, 101-113
Abstract:
We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today’s decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject’s choice set (over food snacks) is known and constant over time, and the time frame is short – subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45% of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80%. We define overconfidence in predicting future preferences as: the difference between actual accuracy at predicting future choices and stated certainty of future preferences. Our results suggest strong evidence of overconfidence. We find that overconfidence increases with the level of stated certainty of future preferences. Finally, we observe that the option value people attach to future choice flexibility decreases with overconfidence. Overconfidence in future preferences affects economic welfare because it says people have too much incentive to lock themselves into future suboptimal decisions.
Keywords: Preference uncertainty; Overconfidence; Experiment; Future preferences (search for similar items in EconPapers)
JEL-codes: D83 D84 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167487015001208
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Certainty and Overconfidence in Future Preferences for Food (2015) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:51:y:2015:i:c:p:101-113
DOI: 10.1016/j.joep.2015.09.006
Access Statistics for this article
Journal of Economic Psychology is currently edited by G. Antonides and D. Read
More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().