Time preference and savoring – how to exploit the Loewenstein contradiction

Mann, Konstantin A. (2018): Time preference and savoring – how to exploit the Loewenstein contradiction.

Abstract

The goal of this paper is to demonstrate and analyze the contradiction between the model of time preference and the concept of savoring and thereupon outline product categories that particularly apply to each one of the preceding models. Both concepts are discussed and exemplified in order to depict the contradiction. Subsequently, the terms utilitarian and hedonic goods are introduced in order to outline useful patterns for the correct assignment of goods to each model. The definition of utilitarian goods is applied to Maslow’s hierarchy of needs to show that they do particularly react to the model of time preference. Afterwards, existing knowledge about the concept of savoring is used in order to show the correlation between hedonic goods and the concept of savoring. Finally, the paper shows that companies can benefit from this categorization by either reacting to given distribution structures in terms of marketing or by identifying to which extent a certain product is perceived as utilitarian or hedonic good and correspondingly postpone or speed-up delivery.

• Item Type: MPRA Paper
• Language: English
• Keywords: Time preference; Savoring; Discounting; Anticipatory utility
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B26 - Financial Economics

References

1. Atmadja, S. S., Sills, E. O., Pattanayak, S. K., Yang, J.C., & Patil, S. (2017). Explaining environmental health behaviors: evidence from rural India on the influence of discount rates. Environment and Development Economics, 22(3), 229–248.

2. Batra, R., & Ahtola, O. T. (1991). Measuring the hedonic and utilitarian sources of consumer attitudes. Marketing letters, 2(2), 159-170

3. Baucells, M., & Bellezza, S. (2016). Temporal profiles of instant utility during anticipation, event, and recall. Management Science, 63(3), 729-748.

4. Becker, G. S., & Mulligan, C. B. (1997). The endogenous determination of time preference. The Quarterly Journal of Economics, 112(3), 729-758.

5. Bentham, J. (1789). The Principles of Morals and Legislation. Clarendon.

6. Bryant, F. (1989). A Four-Factor Model of Perceived Control: Avoiding, Coping, Obtaining, and Savoring. Journal of Personality, 57(4), 773-797.

7. Chun, H. E. (2009). Savoring future experiences: Antecedents and effects on evaluations of consumption experiences. University of Southern California.

8. Doyle, J. R. (2012). Survey of time preference, delay discounting models. Judgment and Decision Making, 8(2), 116–135.

9. Dhar, R., & Wertenbroch, K. (2000) Consumer Choice Between Hedonic and Utilitarian Goods. Journal of Marketing Research, 37(1), 60-71.

10. Dixon, M. J., Victorino, L., Kwortnik, R. J., & Verma, R. (2017). Surprise, Anticipation, and Sequence Effects in the Design of Experiential Services. Production and Operations Management, 26(5), 945-960.

11. Fishburn, P. C., & Rubinstein, A. (1982). Time preference. International Economic review, 677-694.

12. Frederick, S., Loewenstein, G., & O’Donoghue, T. (2002). Time Discounting and Time Preference: A Critical Review. Journal Of Economic Literature, (2), 351-401.

13. Hermann, D., & Musshoff, O. (2016). Measuring time preferences: Comparing methods and evaluating the magnitude effect. Journal of Behavioral and Experimental Economics, 65, 16-26.

14. Jevons, W. S. (1905). The principles of economics: A fragment of a treatise on the industrial mechanism of society and other papers. London: Macmillan and Company, limited.

15. Khan, U., Dhar, R. & Wertenbroch, K. (2005). A behavioral decision theory perspective on hedonic and utilitarian choice. Inside consumption: Frontiers of research on consumer motives, goals, and desires, 1, 144-165.

16. Loewenstein, G. (1987). Anticipation and the valuation of delayed consumption. The Economic Journal, 97(387), 666-684.

17. Loewenstein, G., & Prelec, D. (1991). Negative time preference. The American Economic Review, 81(2), 347-352.

18. Nawijn, J. (2011). Determinants of daily happiness on vacation. Journal of Travel Research, 50(5), 559-566.

19. Okada, E. M. (2005). Justification effects on consumer choice of hedonic and utilitarian goods. Journal of Marketing Research, 42(1), 43-53.

20. Van Der Pol, M. M., & Cairns, J. A. (2000), Negative and zero time preference for health. Health Economics, 9(2), 171–175.

21. Warner, J., & Pleeter, S. (2001). The Personal Discount Rate: Evidence from Military Downsizing Programs. The American Economic Review, 91(1), 33-53.