Evolution of similarity judgements in intertemporal choice

Fabrizio Adriani and Silvia Sonderegger

No 2014-06, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We study Nature's trade-off when endowing people with the cognitive ability to distinguish between different time periods or different prizes. Our key premise is that cognitive ability is a scarce resource, to be deployed only where and when it really matters. We show that this simple insight can explain a number of observed anomalies: (i) time preference reversal, (ii) magnitude effects, (iii) cycles, (iv) interval length effects. An implication of our analysis is that, from an evolutionary perspective, people may be suffering from too much tendency to postpone (rather than to anticipate) consumption, turning upside-down existing interpretations of preference reversal.

Keywords: Foundations of preferences; intertemporal choice; similarity judgments (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-evo and nep-mic
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