Certainty and overconfidence in future preferences for food
(2015) In Journal of Economic Psychology 51. p.101-113- Abstract
- We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today's decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject's choice set (over food snacks) is known and constant over time, and the time frame is short - subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45% of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80%. We define overconfidence... (More)
- We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today's decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject's choice set (over food snacks) is known and constant over time, and the time frame is short - subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45% of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80%. We define overconfidence in predicting future preferences as: the difference between actual accuracy at predicting future choices and stated certainty of future preferences. Our results suggest strong evidence of overconfidence. We find that overconfidence increases with the level of stated certainty of future preferences. Finally, we observe that the option value people attach to future choice flexibility decreases with overconfidence. Overconfidence in future preferences affects economic welfare because it says people have too much incentive to lock themselves into future suboptimal decisions. Published by Elsevier B.V. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/8551716
- author
- Thunstrom, Linda ; Nordström, Jonas LU and Shogren, Jason F.
- organization
- publishing date
- 2015
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Preference uncertainty, Overconfidence, Experiment, Future preferences
- in
- Journal of Economic Psychology
- volume
- 51
- pages
- 101 - 113
- publisher
- Elsevier
- external identifiers
-
- wos:000366766200008
- scopus:84943395543
- ISSN
- 1872-7719
- DOI
- 10.1016/j.joep.2015.09.006
- language
- English
- LU publication?
- yes
- id
- 6e301241-b95a-4b74-8143-739372d52f12 (old id 8551716)
- date added to LUP
- 2016-04-01 09:53:25
- date last changed
- 2023-11-09 06:46:23
@article{6e301241-b95a-4b74-8143-739372d52f12,
abstract = {{We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today's decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject's choice set (over food snacks) is known and constant over time, and the time frame is short - subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45% of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80%. We define overconfidence in predicting future preferences as: the difference between actual accuracy at predicting future choices and stated certainty of future preferences. Our results suggest strong evidence of overconfidence. We find that overconfidence increases with the level of stated certainty of future preferences. Finally, we observe that the option value people attach to future choice flexibility decreases with overconfidence. Overconfidence in future preferences affects economic welfare because it says people have too much incentive to lock themselves into future suboptimal decisions. Published by Elsevier B.V.}},
author = {{Thunstrom, Linda and Nordström, Jonas and Shogren, Jason F.}},
issn = {{1872-7719}},
keywords = {{Preference uncertainty; Overconfidence; Experiment; Future preferences}},
language = {{eng}},
pages = {{101--113}},
publisher = {{Elsevier}},
series = {{Journal of Economic Psychology}},
title = {{Certainty and overconfidence in future preferences for food}},
url = {{http://dx.doi.org/10.1016/j.joep.2015.09.006}},
doi = {{10.1016/j.joep.2015.09.006}},
volume = {{51}},
year = {{2015}},
}