Cross-Period Impatience: Subjective Financial Periods Explain Time-Inconsistent Choices

Minkwang Jang, Oleg Urminsky, June Cotte and Stephen A Spiller

Journal of Consumer Research, 2023, vol. 50, issue 4, 787-809

Abstract: 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.

Keywords: intertemporal choice; time discounting; categorization; mental accounting; budgeting; impulsivity; present bias (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jconrs:v:50:y:2023:i:4:p:787-809.

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