Anticipatory Feelings in Intertemporal Choice on Consumption: A Dynamic Experiment

Abstract

Following the evaluation of anticipatory feelings in Scitovsky’s Joyless Economy, we explored a specific interpretation of reversals in intertemporal choice. Anticipatory feelings can be explained as the feeling experienced by the agent while awaiting an upcoming event. We adopted a dynamic experiment where individuals made decisions of consumption at multiple points of time: three experimental sessions in three different dates at two-week intervals. We elicited the initial plans of the same sample in three different sessions over a one-month period and tracked how they implemented their plans as the anticipated event drew closer. The paper innovates with respect to the literature on intertemporal decision making in that the motivation for a varying discount rate, caused by anticipation or procrastination, has been elicited with both monetary and non-monetary (consumption) incentives and within a dynamic setting. We found that anticipatory feeling is a significant possible explanation behind choice reversal. The results remained significant after controlling the other explanatory factors such as risk aversion, uncertainty and time inconsistency