Mental Zooming as Variable Asset Integration in Inter-temporal Choice

Stein Holden (), Dag Einar Sommervoll () and Mesfin Tilahun ()
Additional contact information
Dag Einar Sommervoll: Centre for Land Tenure Studies, Norwegian University of Life Sciences, Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway
Mesfin Tilahun: Centre for Land Tenure Studies, Norwegian University of Life Sciences, Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway

No 7/20, CLTS Working Papers from Norwegian University of Life Sciences, Centre for Land Tenure Studies

Abstract: Our time preferences deviate systematically from that of Homo economicus. They seem to be driven by a form of mental zooming, where higher and more distant payouts induce a more holistic perspective in contrast to smaller and near future payouts. We model zooming as variable asset integration and ask whether this can explain the observed variation in discount rates in experiments. It can. Equally important, the zooming for both time and magnitude is similar across two countries (Ethiopia and Malawi), and within a country (Ethiopia). An intriguing empirical regularity is that the dimensionless degree of zooming in time is roughly twice the zooming degree in magnitude. We offer no explanation for this asymmetry between time and magnitude.

Keywords: time discounting; magnitude effects; asset integration; zooming theory. (search for similar items in EconPapers)
JEL-codes: C93 D03 D91 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020-10-19
New Economics Papers: this item is included in nep-ore
Note: The paper is part of the NORGLOBAL2 project "Youth Business Groups for Sustainable Development: Lessons from the Ethiopian Model", and it aims at providing a better basis for understanding investment decisions by youth group members.
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nmbu.no/download/file/fid/46338 Full text (application/pdf)

Related works:
Journal Article: Mental Zooming as Variable Asset Integration in Inter-Temporal Choice (2022)
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:hhs:nlsclt:2020_007

Access Statistics for this paper

More papers in CLTS Working Papers from Norwegian University of Life Sciences, Centre for Land Tenure Studies Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Ephrida Tione ().