A model of focusing in economic choice

Quarterly Journal of Economics

Volumn 128, Issue 1, 2013, Pages 53-104

  Koszegi, Botond ^a,b   Szeidl, Adam ^a,c  

^a CENTRAL EUROPEAN UNIVERSITY   (Hungary)

^b UNIVERSITY OF CALIFORNIA   (United States)

^c NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DECISION MAKING; ECONOMIC THEORY; INCENTIVE; LIFESTYLE; NUMERICAL MODEL; WELFARE ECONOMICS;

EID: 84873585368     PISSN: 00335533     EISSN: 15314650     Source Type: Journal    
DOI: 10.1093/qje/qjs049     Document Type: Article

References (68)

1. Abaluck, Jason, "What Would We Eat if We Knew More: The Implications of a Large-Scale Change in Nutrition Labeling,"Working Paper, MIT, 2011
2. Acland, Dan, and Matthew R. Levy, "Habit Formation, Naivete, and Projection Bias in Gym Attendance,"Working Paper, Harvard University, 2010.
3. Akerlof, George A., "Procrastination and Obedience,"American Economic Review, 81, no. 2 (1991), 1-19.
4. Asheim, Geir B., "Procrastination, Partial Naivete, and Behavioral Welfare Analysis,"Working Paper, University of Oslo, 2008.
5. Ashraf, Nava, Dean Karlan, and Wesley Yin, "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines,"Quarterly Journal of Economics, 121 (2006), 635-672
6. Bernheim, B. Douglas, and Antonio Rangel, "Beyond Revealed Preferences: Choice Theoretic Foundations for Behavioral Welfare Economics,"NBER Working Paper No. 13737, January 2008.
7. Bertaut, Carol C., Michael Haliassos, and Michael Reiter, "Credit Card Debt Puzzles and Debt Revolvers for Self Control,"Review of Finance, 13, no. 4 (2009), 657-692.
8. Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer, "Salience and Consumer Choice,"Working Paper, Harvard University, 2012a
9. Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer, "Salience Theory of Choice Under Risk," Quarterly Journal of Economics, 127 (2012b), 1243-1285
10. Brown, Jeffrey R., "Understanding the Role of Annuities in Retirement Planning,"in Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs, Annamaria Lusardi, ed., 178-208 (Chicago: University of Chicago Press, 2009).
11. Brown, Jeffrey R., Marcus D. Casey, and Olivia S. Mitchell, "Who Values the Social Security Annuity New Evidence on the Annuity Puzzle,"NBER Working Paper No. 13800, 2008.
12. Carroll, Christopher D., "Theoretical Foundations of Buffer Stock Savings,"Working Paper, Johns Hopkins University, 2011.
13. Chiu, Andrew, and George Wu, "Prospect Theory,"in Wiley Encyclopedia of Operations Research and Management Science, James J. Cochran, ed. (New York: Wiley, 2009)
14. Cunningham, Tom, "Comparisons and Choice,"Working Paper, 2011
15. Cunningham, Tom, "Comparisons and Choice,"Working Paper, 2011
16. Davidoff, Thomas, Jeffrey R. Brown, and Peter A. Diamond, "Annuities and Individual Welfare,"American Economic Review, 95, no. 5 (2005), 1573-1590.
17. DellaVigna, Stefano, and Ulrike Malmendier, "Contract Design and Self-Control: Theory and Evidence,"Quarterly Journal of Economics, 119 (2004), 353-402
18. DellaVigna, Stefano, and Ulrike Malmendier, "Paying Not to Go to the Gym,"American Economic Review, 96, no. 3 (2006), 694-719.
19. Dunn, Elizabeth W., Timothy D. Wilson, and Daniel T. Gilbert, "Location, Location, Location: The Misprediction of Satisfaction in Housing Lotteries,"Personality and Social Psychology Bulletin, 29 (2003), 1421-1432.
20. Finkelstein, Eric A., Laura A. Linnan, Deborah F. Tate, and Ben E. Birken, "A Pilot Study Testing the Effect of Different Levels of Financial Incentives on Weight Loss Among Overweight Employees,"Journal of Occupational and Environmental Medicine, 49, no. 9 (2007), 981-989.
21. Gabaix, Xavier, "A Sparsity-Based Model of Bounded Rationality", Working paper, NYU Stern, 2011, http://pages.stern.nyu.edu/~xgabaix/papers/ sparsebrconsumer.pdf.
22. Giné, Xavier, Dean Karlan, and Jonathan Zinman, "Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation,"American Economic Journal: Applied Economics, 2, no. 4 (2010), 213-235.
23. Gourville, John T., "Pennies-a-Day: The Effect of Temporal Reframing on Transaction Evaluation,"Journal of Consumer Research, 24, no. 4 (1998), 395-408.
24. Gruber, Jonathan, and Botond Ko{double acute}szegi, "Is Addiction 'Rational' Theory and Evidence,"Quarterly Journal of Economics, 116, no. 4 (2001), 1261-1305.
25. Gruber, Jonathan, and Botond Ko{double acute}szegi, "Tax Incidence When Individuals Are Time-Inconsistent: The Case of Cigarette Excise Taxes,"Journal of Public Economics, 88, nos. 9-10 (2004), 1959-1987.
26. Hamermesh, Daniel S., and Joel B. Slemrod, "The Economics of Workaholism: We Should Not Have Worked on This Paper,"B.E. Journal of Economic Analysis and Policy: Contributions to Economic Analysis and Policy, 8, no. 1 (2008).
27. Ippolito, Pauline M., and Richard A. Ippolito, "Measuring the Value of Life Saving from Consumer Reactions to New Information,"Journal of Public Economics, 25, nos. 1-2 (1984), 53-81.
28. Kahneman, Daniel, Alan B. Krueger, David Schkade, Norbert Schwarz, and Arthur A. Stone, "Would You Be Happier If You Were Richer A Focusing Illusion,"Science, 312, no. 5782 (2006), 1908-1910.
29. Kahneman, Daniel, and Amos Tversky, "Prospect Theory: An Analysis of Decision under Risk,"Econometrica, 47, no. 2 (1979), 263-291.
30. Ko{double acute}szegi, Botond, and Adám Szeidl, "A Model of Focusing in Economic Choice,"Working Paper, UC Berkeley, 2011, http://elsa.berkeley.edu/ botond/ focusing.pdf.
31. Laibson, David I., "Golden Eggs and Hyperbolic Discounting,"Quarterly Journal of Economics, 112 (1997), 443-477.
32. Laibson, David I., Andrea Repetto, and Jeremy Tobacman, "Estimating Discount Functions with Consumption Choices over the Lifecycle,"NBER Working Paper No. 13314, 2007.
33. Lehenkari, Mirjam, "The Hedonic Editing Hypothesis: Evidence from the Finnish Stock Market,"Journal of Behavioral Finance, 10, no. 1 (2009), 9-18.
34. Liberman, Nira, and Yaacov Trope, "The Role of Feasibility and Desirability Considerations in Near and Distant Future Decisions: A Test of Temporal Construal Theory,"Journal of Personality and Social Psychology, 75, no. 1 (1998), 5-18.
35. Linville, Patricia W., and Gregory W. Fischer, "Preferences for Separating or Combining Events,"Journal of Personality and Social Psychology, 60, no. 1 (1991), 5-23.
36. Loewenstein, George, Ted O'Donoghue, and Matthew Rabin, "Projection Bias in Predicting Future Utility,"Quarterly Journal of Economics, 118 (2003), 81-123
37. Loomes, Graham, and Robert Sugden, "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty,"Economic Journal, 92, no. 368 (1982), 805-824.
38. Lussier, Jennifer Plebani, Sarah H. Heil, Joan A. Mongeon, Gary J. Badger, and Stephen T. Higgins, "A Meta-Analysis of Voucher-Based Reinforcement Therapy for Substance Use Disorders,"Addiction, 101, no. 2 (2006), 192-203.
39. Meier, Stephan, and Charles Sprenger, "Present-Biased Preferences and Credit Card Borrowing,"American Economic Journal: Applied Economics, 2, no. 1 (2010), 193-210.
40. Mullainathan, Sendhil, Joshua Schwartzstein, and Andrei Shleifer, "Coarse Thinking and Persuasion,"Quarterly Journal of Economics, 123, no. 2 (2008), 577-619.
41. O'Donoghue, Ted, and Matthew Rabin, "Addiction and Self-Control,"in Addiction: Entries and Exits, Jon Elster, ed. (New York: Russell Sage Foundation, 1999a).
42. O'Donoghue, Ted, and Matthew Rabin, "Doing It Now or Later,"American Economic Review, 89, no. 1 (1999b), 103-124.
43. O'Donoghue, Ted, and Matthew Rabin, "Optimal Sin Taxes,"Journal of Public Economics, 90, nos. 10-11 (2006), 1825-1849.
44. Prelec, Drazen, and George Loewenstein, "The Red and the Black: Mental Accounting of Savings and Debt,"Marketing Science, 17, no. 1 (1998), 4-28.
45. Rabin, Matthew, and Georg Weizsäcker, "Narrow Bracketing and Dominated Choices,"American Economic Review, 99, no. 4 (2009), 1508-1543.
46. Read, Daniel, George Loewenstein, and Matthew Rabin, "Choice Bracketing,"Journal of Risk and Uncertainty, 19, nos. 1-3 (1999), 171-197.
47. Rick, Scott, and George Loewenstein, "Intangibility in Intertemporal Choice,"Philosophical Transactions of the Royal Society of London, 363, no. 1511 (2008), 3813-3824.
48. Rubinstein, Ariel, "Similarity and Decision-Making Under Risk (Is There a Utility Theory Resolution to the Allais Paradox),"Journal of Economic Theory, 46, no. 1 (1988), 145-153.
49. Schkade, David A., and Daniel Kahneman, "Does Living in California Make People Happy A Focusing Illusion in Judgments of Life Satisfaction,"Psychological Science, 9, no. 5 (1998), 340-346.
50. Schwartzstein, Joshua, "Selective Attention and Learning,"Working Paper, Dartmouth College, 2012
51. Scitovsky, Tibor, The Joyless Economy: The Psychology of Human Satisfaction (New York: Oxford University Press, 1976)
52. Shui, Haiyan, and Lawrence M. Ausubel, "Time Inconsistency in the Credit Card Market," 14th Annual Utah Winter Finance Conference, 2004. Available at http://ssrn.com/abstract=586622.
53. Sindelar, Jody L., "Paying for Performance: The Power of Incentives over Habits,"Health Economics, 17, no. 4 (2008), 449-451.
54. Sindelar, Jody, Brian Elbel, and Nancy M. Petry, "What Do We Get for Our Money Cost-Effectiveness of Adding Contingency Management,"Addiction, 102, no. 2 (2007), 309-316.
55. Skiba, Paige Marta, and Jeremy Tobacman, "Payday Loans, Uncertainty, and Discounting: Explaining Patterns of Borrowing, Repayment, and Default,"Vanderbilt Law and Economics Research Paper No. 08-33, 2008.
56. Spiegler, Ran, Bounded Rationality and Industrial Organization (New York: Oxford University Press, 2011)
57. Spiegler, Ran, "Competitive Framing," Mimeo, Tel Aviv University, 2012
58. Stango, Victor, and Jonathan Zinman, "What Do Consumers Really Pay on Their Checking and Credit Card Accounts Explicit, Implicit, and Avoidable Costs," American Economic Review Papers and Proceedings, 99, no. 2 (2009), 424-429.
59. Thaler, Richard, "Some Empirical Evidence on Dynamic Inconsistency,"Economics Letters, 8 (1981), 201-207
60. Thaler, Richard, "Mental Accounting and Consumer Choice,"Marketing Science, 4, no. 3 (1985), 199-214.
61. Thaler, Richard, "Mental Accounting Matters,"Journal of Behavioral Decision Making, 12, no. 3 (1999), 183-206.
62. Thaler, Richard, and Shlomo Benartzi, "Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving,"Journal of Political Economy, 112, no. 1 (2004), S164-S187.
63. Thaler, Richard, and Eric J. Johnson, "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice,"Management Science, 36, no. 6 (1990), 643-660.
64. Tversky, Amos, "Intransitivity of Preferences,"Psychological Review, 76, no. 1 (1969), 31-48.
65. Tversky, Amos, and Daniel Kahneman, "The Framing of Decisions and the Psychology of Choice,"Science, 211 (1981), 453-458
66. Viscusi, W. Kip, and Joni Hersch, "The Mortality Cost to Smokers,"Journal of Health Economics, 27 (2008), 943-958.
67. Volpp, Kevin G., Leslie K. John, Andrea B. Troxel, Laurie Norton, Jennifer Fassbender, and George Loewenstein, "Financial Incentive-Based Approaches for Weight Loss,"Journal of the American Medical Association, 300, no. 22 (2008), 2631-2637.
68. Yaari, Menahem E., "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer,"Review of Economic Studies, 32, no. 5 (1965), 137-150.