Temporal myopia in sustainable behavior under uncertainty

Consumers in today's world are confronted with the alarming consequences of unsustainable behavior such as pollution and resource degradation. In addition, they are facing increases in uncertainty due to external events such as economic crises and terror attacks. These two problems are central to consumers' lives, occur on a global scale, and have significant impact on the world's political, economic, environmental, and social landscapes. Contributing to research on persuasion and pro-social behavior, we show in four studies, conducted online, in the lab, and in the field, that these two problems are interconnected. Studies 1 and 2 demonstrate that uncertainty leads to lower levels of sustainable behavior in comparison to certainty. Study 2 reveals in addition that this is due to the display of higher levels of temporal discounting under uncertainty (i.e., adopting a more immediate orientation). Finally, Studies 3 and 4 show that emphasizing the immediate benefits of sustainability during uncertainty reverses the negative effect and leads consumers to act more sustainably. Overall, these findings provide valuable implications for policy makers and responsible marketers.     

时间偏好、跨期选择不一致及其神经基础

时间偏好是跨期选择行为研究中一个至关重要的依据,19世纪的经济学家们通过对它的定性分析形成了一套系统的古典时间偏好理论。直到1937年萨缪尔森提出指数贴现模型并成为新古典时间偏好理论的核心技术手段,新古典时间偏好理论得以成为跨期选择问题的主流分析框架。但因其高度理性的假定,指数贴现模型也一直饱受诟病和质疑,几乎每一个关键假设都有系统的实证结果与之相悖。20世纪80年代行为经济学的兴起,行为经济学家们肯定认知偏差的存在并引入了贴现率递减的双曲线贴现模型完成了对许多市场异象的解释,加之神经经济学和神经影像学的发展为时间偏好不一致提供了神经基础,时间偏好的研究迎来了新篇章。文章将对这些研究成果进行较为全面的回顾与评述,借以推动国内时间偏好理论研究的发展。     

Time and Space in Strategy Discourse: Implications for Intertemporal Choice

Research summary : When describing the future, executives draw analogies between time and space (“we are on the right path,” “the deadline is approaching”). These analogies shape how executives construe the future and influence attitudes to action with long‐term benefits but short‐term costs. Ego‐moving frames (“we are approaching the future”) prompt a focus on the present, whereas time‐moving frames (“the future is approaching”) underscore the advent of the future as inevitable. Ultimately, action that prioritizes long‐term returns depends both on how executives conceive of the future and whether they believe they can engender favorable outcomes. This balance between recognizing the inevitability of the future (time‐moving frame) and the capacity to shape outcomes (control beliefs) stands in contrast to the more agentic forms of discourse that are dominant in strategy . Managerial summary : Executives often prioritize maximizing immediate returns over investing to build a long‐term competitive advantage. How they think about the future offers one explanation for this short‐termism. This article distinguishes two ways of framing the future with implications for decision‐making. Are we approaching the future (the ego‐moving frame) or is it approaching us (the time‐moving frame)? As long as executives have confidence in their ability to achieve forecasted results, they focus on long‐term returns in their decision‐making when they recognize the advent of the future as inevitable (the time‐moving frame). In contrast, though executives use the ego‐moving frame to show that they are active agents, they weigh future returns less heavily when framing the future in this way . Copyright © 2017 John Wiley & Sons, Ltd.     

Rethinking banking. Debt discounting and the making of modern money as liquidity

The article radically challenges the conventional view of modern banking as financial intermediation and rejects the mutually related notion, firmly entrenched in both the mainstream and alternative imaginary, of fractional reserve banking. By contrast, it argues that modern banks are peculiar financiers which, far from banking other people's money, are originally and primarily involved with making money by creating a most fundamental institution of capitalism: liquidity. Crucially, central to the bank-engendered creation of liquidity is a negotiation of value that does not involve any formal lending of cash by a creditor – in fact, it does not require a creditor at all. Instead, it relies on a quid pro quo of debts performed by means of discounting whereby a regime of fluid property relations of mutual indebtedness, commonly known as debt finance, is established. In this regime of liquidity, money is constructed as entirely a debtors’ money: it is the outcome of a process of monetisation of bank debts entangled with a capitalisation of other people's debts.     

An Experimental Study of Influences of Performance-Related Payments on Timing of Delegated Stock Purchases

Performance-related bonuses are important tools for investment organizations to incentivize stock traders. Yet, two experiments indicate that bonuses rewarding short-term performance may lead to worse timing of purchases. The authors propose that hyperbolic time discounting makes participants set lower aspired purchase prices for short-term (decreasing percentage) bonuses than for long-term (increasing percentage) bonuses. For this reason purchases are made earlier for decreasing than increasing percentage bonuses, earlier for decreasing than random prices, and earlier for high price volatility than for low price volatility. Neither purchases at the lowest price or highest bonus are attained. Hyperbolic time discounting may account for bubbles observed in experimental double-auction markets.     

Characterization of stationary preferences in a continuous time framework

We characterize preference relations on continuous time consumption paths which admit an exponential discounting representation. We provide two theorems as such, one in the cardinal framework and another in the ordinal framework. Our characterizations parallel the known characterizations in discrete time framework. In the cardinal framework, we adopt the axioms of Epstein (1983), which characterize a stationary preference relation in discrete time, and obtain the exponential discounting model as a special case of the discounting model proposed by Uzawa (1968). In the ordinal framework, we adopt the axioms of Bleichrodt et al. (2008) which were proposed to generalize Koopmans’ classical characterization of stationary preferences.     

Bounded rationality,neural network and folk theorem in repeated games with discounting

Summary The perfect folk theorem (Fudenberg and Maskin [1986]) need not rely on excessively complex strategies. We recover the perfect folk theorem for two person repeated games with discounting through neural networks (Hopfield [1982]) that have finitely many associative units. For any individually rational payoff vector, we need neural networks with at most 7 associative units, each of which can handle only elementary calculations such as maximum, minimum or threshold operation. The uniform upper bound of the complexity of equilibrium strategies differentiates this paer from Ben-Porath and Peleg [1987] in which we need to admit ever more complex strategies in order to expand the set of equilibrium outcomes.I would like to thank Hao Li and John Curran for excellent research assistance. Financial support from National Science Foundation (SES-9223483), Sloan Foundation and the Division of Social Sciences at the University of Chicago is gratefully acknowledged.     

An optimisation strategy for concurrent Supply Chain Finance schemes

The uncertainty and financial instability that has plagued companies and industries in the last decade is one of the root causes behind the development of Supply Chain Finance (SCF), a set of schemes aiming to optimise the management of financial flows at the supply chain level. Recent years have seen a proliferation of different SCF schemes, with different impacts on working capital costs and requirements throughout the supply chain. The practicality of SCF usage indicates that the concurrent adoption of multiple schemes is not only possible, but even likely. However, literature on SCF still focuses on individual SCF schemes, while the concurrent adoption of multiple SCF schemes remains largely unaddressed. Thus, the objective of this paper is to assess the tangible benefits deriving from a multi-scheme SCF strategy. Based on the analytical formulation of the benefits of three relevant SCF schemes (Reverse Factoring, Inventory Financing and Dynamic Discounting), the paper formalises a model that investigates the benefits that a buyer can achieve by onboarding suppliers onto these three schemes. The results show how working capital requirements and the cost of finance represent the key parameters to assessing the benefits of the concurrent adoption of multiple SCF schemes. Moreover, the funding limits of the SCF schemes themselves strongly affect the relevance of such strategies; strict limits will increase the relevance of having ‘alternative’ schemes available to onboard suppliers. To highlight the managerial relevance of the model, the article provides a numerical example based on a real-world application.     

Insurance,self-control,and contract flexibility

We study a competitive insurance market in which some consumers have too optimistic expectations regarding their future use of preventive measures. When contracts are long-term and inflexible, such naive consumers would increase the costs of insurance for low-risk consumers. The competitive insurance market therefore offers flexible contracts that allow for switching between different tariffs. Sophisticated consumers choose a partial insurance tariff and remain low-risks. Naive consumers choose the same tariff, but later switch to full insurance, and become high-risks. If there are sufficiently many naive consumers, they pay a transfer to sophisticated consumers (so that high-risks subsidize low-risks). In contrast, there are no such transfers when contracts are short-term. The model generates novel implications for the time frame of insurance contracts and insurance requirements.     

Multiple solutions under quasi-exponential discounting

Infinite horizon dynamic optimization problems with non-exponential time preferences may not only exhibit time inconsistency but may also have multiple solutions with distinct payoffs. We here show that such multiplicity is generic in the sense that it occurs in an open set of such decision problems, even with small state- and action-spaces. Non-exponential discounting allows for an “addictive” equilibrium alongside a “virtuous” equilibrium. We also provide a sufficient condition for uniqueness in infinitely repeated decision problems with general action spaces. Authors thank Philippe Jehiel, Maria Saez-Marti and Bill Sandholm for comments to an earlier version, and the Knut and Alice Wallenberg Research Foundation for financial support.