- Elgar original reference
Edited by Victoria Wells and Gordon Foxall
Chapter 9: Discounting and Impulsivity: Overview and Relevance to Consumer Choice
Luís L. Oliveira and Leonard Green Choice and decision-making are ubiquitous and incessant processes in our lives. Our daily choices range from the most ordinary decisions, such as what to wear and what to have for breakfast, to life-defining ones, such as which college to attend and which job offer to accept. We make decisions that range from the relatively insignificant, as the movie we will watch tonight, to ones as grave as those concerning our health. In many choice situations, we are faced with options that differ in their short-term and long-term consequences. Some of us may be more influenced by the more immediate consequences whereas others may be more influenced by the long-term consequences of the choice options. For example, do we purchase cheaper incandescent light bulbs that are relatively short-lived and energy inefficient, and appliances with a lower initial cost but poor energy efficiency levels, or do we make a larger initial investment in energy efficient light bulbs and appliances in order to save money in the long run? Similarly, many choice situations involve options that differ in the probabilities associated with the outcomes. In these cases, some of us may feel compelled to avoid sources of risk, whereas others may be more prone to taking chances. For example, do we keep our money in an interest-bearing savings account and invest in certificates of deposit that pay a low rate of interest and involve little risk, or do we invest in high-risk but potentially high-return venture...
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