Economics at your fingertips  

Decision-Environment Effects on Intertemporal Financial Choices: How Relevant are Resource-Depletion Models?

Michael Kuhn (), Peter Kuhn () and Marie Claire Villeval ()

Post-Print from HAL

Abstract: A large literature in psychology studies the effects of the immediate decision environment on behavior, and conceptualizes both cognitive capacity and self-control as scarce resources that can be depleted by recent use, and replenished by factors like rest and nutrition. We assess the relevance of resource-depletion models for intertemporal financial decisions by estimating the effects of three interventions –prior impulse-controlling activity, consumption of a sugared drink, and consumption of a placebo (sugar-free) drink-- on intertemporal monetary choices in a cash-advance framework. These manipulations have large impacts on the demand for advances, but contrary to resource-based models prior impulse-controlling activity and placebo drink consumption increase patience. To understand these effects, we estimate treatment effects on the three parameters of a decision utility model for every subject in our sample. All treatments reduce utility curvature and present-bias, and these movements are highly correlated. Together, we argue that these patterns suggest that the treatments are acting not on subjects' fundamental utility parameters but on subjects' tendencies to frame financial decisions narrowly (within the frame of the lab experiment) versus broadly (in the context of their other financial options). Thus, while decision environments have large effects on intertemporal financial decisions, both the direction and the mechanisms underlying these effects appear to be quite different from those suggested by resource-depletion models.

Keywords: experiment; resource-based model; Time preferences; present bias; availability heuristic (search for similar items in EconPapers)
Date: 2017
Note: View the original document on HAL open archive server:
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Published in Journal of Economic Behavior and Organization, Elsevier, 2017, 137, pp. 72-89. ⟨10.1016/j.jebo.2017.02.014⟩

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Decision-environment effects on intertemporal financial choices: How relevant are resource-depletion models? (2017) Downloads
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:

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

Page updated 2019-10-23
Handle: RePEc:hal:journl:halshs-01471358