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The Bright Side of Dread: Anticipation Asymmetries Explain Why Losses are Discounted Less than Gains

27 Pages Posted: 19 Nov 2011 Last revised: 5 Dec 2015

David J. Hardisty

Sauder School of Business

Shane Frederick

Yale School of Management

Elke U. Weber

Columbia Business School - Management & Psychology

Date Written: November 1, 2011

Abstract

The dread of future losses weighs more heavily than the pleasure of anticipating future gains, even after controlling for loss aversion. This happens because waiting for a gain is a mixed emotional experience that is both pleasurable (due to savoring) and painful (due to impatience), whereas waiting for a loss is a more unidimensional painful experience (dread). Anticipation predicts time preference, such that the more people enjoy anticipating [dread] an event, the more they prefer to delay it [get it over with]. In combination, these findings explain and mediate the "sign effect" in discounting, i.e., the fact that losses are discounted less than gains. Furthermore, this pattern of results remains robust even after controlling for loss aversion.

Keywords: intertemporal choice, temporal discounting, framing, affect

Suggested Citation

Hardisty, David J. and Frederick, Shane and Weber, Elke U., The Bright Side of Dread: Anticipation Asymmetries Explain Why Losses are Discounted Less than Gains (November 1, 2011). Available at SSRN: https://ssrn.com/abstract=1961370 or http://dx.doi.org/10.2139/ssrn.1961370

Shane William Frederick

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
2034368122 (Phone)

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

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