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http://ssrn.com/abstract=2244236
 
 

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The Importance of the Cognitive Environment for Intertemporal Choice


Michael Kuhn


University of California, San Diego (UCSD)

Peter Kuhn


University of California, Santa Barbara - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

Marie Claire Villeval


National Center for Scientific Research (CNRS) - Institute of Economic Theory and Analysis (GATE); Institute for the Study of Labor (IZA)

April 3, 2013

GATE Working Paper No. 1316

Abstract:     
We experimentally manipulate two aspects of the cognitive environment - cognitive depletion and recent sugar intake - and estimate their effects on individuals’ time preferences in a way that allows us to identify the structural parameters of a simple (α,β,δ) intertemporal utility function for each person. We find that individuals exposed to a prior cognitive load, individuals who consumed a sugared drink and individuals who consumed a sugar-free drink all defer more income than a control group exposed to none of these conditions. Structural estimates show that all three effects are driven entirely by increases in the intertemporal substitution elasticity parameter (α). Together, our results suggest that at least for complex economic decisions like intertemporal financial choice, the ‘attention/focusing’ effect of both prior cognitively demanding activity and prior assignment of a primary reward can improve decision-making.

Number of Pages in PDF File: 55

Keywords: Time preferences, self-control, depletion, sucrose, experiment

JEL Classification: C91, D90

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Date posted: April 5, 2013  

Suggested Citation

Kuhn, Michael and Kuhn, Peter and Villeval, Marie Claire, The Importance of the Cognitive Environment for Intertemporal Choice (April 3, 2013). GATE Working Paper No. 1316. Available at SSRN: http://ssrn.com/abstract=2244236 or http://dx.doi.org/10.2139/ssrn.2244236

Contact Information

Michael Kuhn (Contact Author)
University of California, San Diego (UCSD) ( email )
9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States
Peter J. Kuhn
University of California, Santa Barbara - Department of Economics ( email )
North Hall 3036
Santa Barbara, CA 93106
United States
(805) 893-3666 (Phone)
(805) 893-8830 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Marie Claire Villeval
National Center for Scientific Research (CNRS) - Institute of Economic Theory and Analysis (GATE) ( email )
93, chemin des Mouilles
Ecully, 69130
France
+33 472 86 60 79 (Phone)
+33 472 86 60 90 (Fax)
HOME PAGE: http://www.gate.cnrs.fr/equipe/perso/villeval/villeval.html
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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