Kisses vs. Shocks: Contemplation Asymmetries (Partly) Explain Why Negative Events are Discounted Less than Positive Events
47 Pages Posted: 19 Nov 2011 Last revised: 3 Jul 2019
Date Written: July 1, 2019
Consumers discount future positives more the future negatives, the so-called “sign effect”. This happens partly because the contemplation of future negative events is more impactful than the contemplation future positive events, even after controlling for loss aversion. Thinking about a future positive event is a mixed emotional experience that is both pleasurable and painful, whereas thinking about a future negative event is a more unidimensionally painful experience. Contemplation utility partly determines time preference, such that the more people enjoy contemplating an event, the more they prefer to delay it, and vice versa. In combination, these findings partly explain the sign effect in intertemporal choice and offer unique insights for nudging consumers to care more about future outcomes.
Keywords: intertemporal choice, temporal discounting, framing, affect
Suggested Citation: Suggested Citation