Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2023
  • Working Paper

Cognitive Uncertainty in Intertemporal Choice

By: Benjamin Enke and Thomas Graeber
  • Format:Print
  • | Language:English
ShareBar

Abstract

This paper studies the relevance of cognitive uncertainty – subjective uncertainty over one's utility-maximizing action – for understanding and predicting intertemporal choice. The main idea is that when people are cognitively noisy, such as when a decision is complex, they implicitly treat different time delays to some degree alike. By experimentally measuring and manipulating cognitive uncertainty, we document three economic implications of this idea. First, cognitive uncertainty explains various core empirical regularities, such as why people often appear very impatient, why per-period impatience is smaller over long than over short horizons, why discounting is often hyperbolic even when the present is not involved, and why choices frequently violate transitivity. Second, impatience is context-dependent: discounting is substantially more hyperbolic when the decision environment is more complex. Third, cognitive uncertainty matters for choice architecture: people who are nervous about making mistakes are twice as likely to follow expert advice to be more patient.

Keywords

Cognitive Uncertainty; Intertemporal Choice; Cognition and Thinking; Complexity; Decision Choices and Conditions

Citation

Enke, Benjamin, and Thomas Graeber. "Cognitive Uncertainty in Intertemporal Choice." NBER Working Paper Series, No. 19577, December 2021. (R&R at The Quarterly Journal of Economics.)
  • Find it at Harvard
  • Read Now

About The Author

Thomas W. Graeber

Negotiation, Organizations & Markets
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Stories, Statistics and Memory

    By: Thomas Graeber, Christopher Roth and Florian Zimmermann
    • 2022
    • Faculty Research

    Confidence, Self-Selection and Bias in the Aggregate

    By: Benjamin Enke, Thomas Graeber and Ryan Oprea
    • Proceedings of the National Academy of Sciences

    Measuring the Scientific Effectiveness of Contact Tracing: Evidence from a Natural Experiment

    By: Thiemo Fetzer and Thomas Graeber
More from the Authors
  • Stories, Statistics and Memory By: Thomas Graeber, Christopher Roth and Florian Zimmermann
  • Confidence, Self-Selection and Bias in the Aggregate By: Benjamin Enke, Thomas Graeber and Ryan Oprea
  • Measuring the Scientific Effectiveness of Contact Tracing: Evidence from a Natural Experiment By: Thiemo Fetzer and Thomas Graeber
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College