Journal ArticleDOI
The behavioral life‐cycle hypothesis
Hersh Shefrin,Richard H. Thaler +1 more
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In this article, self-control, mental accounting, and framing are incorporated in a behavioral enrichment of the life-cycle theory of saving called the Behavioral Life Cycle (BLC) hypothesis.Abstract:
Self-control, mental accounting, and framing are incorporated in a behavioral enrichment of the life-cycle theory of saving called the Behavioral Life-Cycle (BLC) hypothesis. The key assumption of the BLC theory is that households treat components of their wealth as nonfungible, even in the absence of credit rationing. Specifically, wealth is assumed to be divided into three mental accounts: current income, current assets, and future income. The temptation to spend is assumed to be greatest for current income and least for future income. Considerable empirical support for the BLC theory is presented, primarily drawn from published econometric studies.read more
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Doing It Now or Later
Ted O'Donoghue,Matthew Rabin +1 more
TL;DR: O'Donoghue et al. as discussed by the authors presented a model for hyperbolic discounting with the concept of doing it now or later (Doing It Now or Later).
Journal ArticleDOI
Mental accounting matters
TL;DR: Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities as discussed by the authors, where outcomes are perceived and experienced, and how decisions are made and subsequently evaluated.
Journal ArticleDOI
Delay of gratification in children
TL;DR: The nature of this type of future-oriented self-control and the psychological processes that underlie it are analyzed and the particular types of preschool delay situations diagnostic for predicting aspects of cognitive and social competence later in life are specified.
Journal ArticleDOI
Separate Neural Systems Value Immediate and Delayed Monetary Rewards
TL;DR: The authors examined the neural correlates of time discounting while subjects made a series of choices between monetary reward options that varied by delay to delivery and demonstrated that two separate systems are involved in such decisions.
Posted Content
Psychology and Economics
TL;DR: In this paper, the authors present a longer version of an essay under preparation for possible publication in the Journal of Economic Literature, which they refer to as their work on reference-dependent utility.
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Journal ArticleDOI
Prospect theory: analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
Journal ArticleDOI
Mental Accounting and Consumer Choice
TL;DR: In this article, a new model of consumer behavior using a hybrid of cognitive psychology and microeconomics was developed using a mental coding of combinations of gains and losses of a consumer.
Journal ArticleDOI
Specious reward: a behavioral theory of impulsiveness and impulse control.
TL;DR: This work has shown that impulsiveness seems to be best accounted for by the hyberbolic curves that have been found to describe the decline in effectiveness of rewards as the rewards are delayed from the time of choice.
Journal ArticleDOI
Some empirical evidence on dynamic inconsistency
TL;DR: In this paper, individual discount rates for losses and gains were estimated from survey evidence and they were found to vary inversely with the size of the reward and the length of time to be waited.