Munich Personal RePEc Archive

Distancia Psicológica

Moreno-Okuno, Alejandro and Aguilera Navarrete, Natividad (2014): Distancia Psicológica.

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Abstract

The utility function with traditional exponential discount cannot explain individuals´ problems of inter-temporal inconsistence and self-control. Several economists have explained these problems with what is known as “present-bias”. The present-bias means that a good becomes more tempting when it is in the present than when it is in the future. Nevertheless, how tempting a good is depends on other factors as well. For example, a good becomes more tempting the closer it is in spatial distance from an individual. The psychological theory of “psychological distance” assumes that individuals give more importance to those goods that are closer to us (we give more importance to the present because it is closer in temporal distance). In this article we generalize the concept of present bias to include other dimensions of psychological distance. We propose a model in which individuals give more importance not only to those goods that are closer in temporal distance, but to those which are closer, for example in spatial distance. This allows individuals to control their present-bias by moving away their temptations in any psychological distance different than the temporal distance.

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