Back to the Present: Mental Time Travel-Induced Illusions about Financial, Ethical, and Tortious Behavior
62 Pages Posted: 21 Sep 2013 Last revised: 10 Sep 2014
Date Written: September 9, 2014
An intuitive and popular belief is that we steadily improve our decision-making over time by learning from experience. This is a myth because learning from experience is quite complex and difficult due to many reasons. One reason is that we routinely engage in mental time travel by anticipating our future and remembering our past. Our anticipations and memories differ systematically from our experiences. Research in psychology and neuroscience reveals that many of our anticipations and remembrances are systematically inaccurate and lead us to hold illusions about how we will or do behave. This Article analyzes a number of temporally-caused illusions that we have about our financial, ethical, and tortious decision-making. These illusions in turn influence our financial, ethical, and tortious decision-making. Such decision-making tasks can be complex; demand focused, cognitive attention; generate noisy feedback; and provoke anxiety, stress, and other strong and quite often negative emotions. Our experiences are intrinsically complex, endogenous, and scarce. We selectively reconstruct our memories of experiences. We have limited attention with which to learn. We are motivated to pay attention to that which we like to think about and ignore that which we find unpleasant. This Article applies research about human learning in general and human learning from experience in particular to explain how and why human learning will inevitably be incomplete. This Article considers legal implications of bounded learning. Creative examples of responses to bounded learning include financial entertainment computer video games, such as one where a player is a vampire managing a blood bar and planning for retirement. Empathy, identity, and tangibility gaps exist between our present and future selves. Two tools that act effectively as behavioral time machines to facilitate our mental time travel and close the above gaps are: future lifestyle imagination exercises and virtual reality avatars of our aged-morphed future selves. This Article concludes by explaining how fostering increased mindfulness can help us mitigate temporal illusions.
Keywords: Temporal Illusions, Ethical Mirages, Affective Forecasting, Learning, Memory, Torts, Behavioral Time Machines, Mindfulness
JEL Classification: D03, D11, D14, D18, G02, K00, K13, K22
Suggested Citation: Suggested Citation