Psychological Construal of Economic Behavior

Posted: 27 Oct 2015

See all articles by David Leiser

David Leiser

Dept. of Psychology - Ben Gurion University of the Negev

Ofer H. Azar

Ben-Gurion University of the Negev - Guilford Glazer Faculty of Business and Management

Liat Hadar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship

Date Written: 2008

Abstract

According to construal level theory (CLT) [Trope, Y., & Liberman, N. (2003) Temporal construal. Physical Review, 110, 403-421], psychological representation of information depends on "psychological distance", that is, on whether the relevant information refers to the near or distant psychological space. While CLT was originally developed to account for intertemporal choice, Trope and Liberman proposed that it could account for other dimensions of psychological distance such as social distance. We follow up on Trope and Liberman’s proposal and demonstrate how CLT accounts for a wide range of economic behaviors such as predicting the choices of others, advice giving, saving for retirement, and the failure to annuitize assets at retirement. By explaining how CLT can account for these various economic behaviors and suggesting novel predictions, we hope to stimulate researchers to investigate further the role of psychological distance in economic behavior.

Keywords: Behavioral economics; Construal level theory; Psychology and economics; Behavioral decision making

JEL Classification: A12; D01; D14; D90; H55

Suggested Citation

Leiser, David and Azar, Ofer H. and Hadar, Liat, Psychological Construal of Economic Behavior (2008). Journal of Economic Psychology, Vol. 29, No. 5, 2008. Available at SSRN: https://ssrn.com/abstract=2680139

David Leiser

Dept. of Psychology - Ben Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

HOME PAGE: http://www.bgu.ac.il/~dleiser

Ofer H. Azar

Ben-Gurion University of the Negev - Guilford Glazer Faculty of Business and Management ( email )

P.O. Box 653
Beer-Sheva, 84105
Israel
+972 8 6472675 (Phone)
+972 8 6477691 (Fax)

HOME PAGE: http://www.oferazar.com

Liat Hadar (Contact Author)

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship ( email )

P.O. Box 167
Herzliya, 46150
Israel

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