The "mere token" effect

[ciphergoth]

Happened across a fascinating new cognitive bias today: the "mere token" effect. In summary:

• If you offer people a choice between $300 in a week or $900 in a year, 62% of respondents choose the $300 in a week.
• If you tell them that, immediately after they choose, you're going to give them $50, and then present them with the same choice, they make roughly the same decision.
• If you offer them a choice between $50 now and $300 in a week, or $50 now and $900 in a year, suddenly 52% of respondents choose the $900 in a year option.

Obviously there's no rational reason to make a different choice in the second and third scenarios, the options in both scenarios are really the same, but the difference in the way they are presented makes a huge difference to people's responses.

It's worth noting that hyperbolic discounting with intertemporal bargaining, the model presented in "Breakdown of Will" that I've enthused about before, completely fails to predict this phenomenon.

Scope Insensitivity and the "Mere Token" Effect, Oleg Urminsky, 2006.

Update: I've edited the second point above: it used to read "If you give them $50, and then present them with the same choice, they make roughly the same decision". This gives the misleading impression that there's some difference in substance between the second and third points, which resulted in some discussions below. I hope that with the new phrasing, it's clear that there is no real difference at all between the second and third scenario; it is exactly the same choice phrased in two different ways. Updated: trying yet again with phrasing of the second choice.

Comments

[ciphergoth.livejournal.com]

You seem to be saying the same thing as deiberateblank and hughe above; see my replies to them. There is no practical difference between the second and third options whatsoever; they are the same thing presented in two different ways.

[deliberateblank.livejournal.com]

They are only the same after the fact, in the same way that the probability of a fair coin landing heads is 0.5 before you throw it, but 0 or 1 afterwards.

[ciphergoth.livejournal.com]

No, they are entirely the same. I've edited the post to try and make this clearer.

[deliberateblank.livejournal.com]

Hmm. The original wording was clear, if wrong. The new wording is less clear, so I went to the paper. So the distinction is whether the token is presented as a separate event that will just happen anyway, or explicitly as a result of the choice, even though it'll just happen anyway in all available choices.

It looks like you've chosen the percentages for 1 and 3 from study 1a, which only considered cases 1 and 3. Case 2 was introduced in study 1c, which used a $100 'token' and a choice between $300 and $1000, resulting in percentages choosing the $1000 of 63%, 67% and 73% for the three cases.

[ciphergoth.livejournal.com]

Yes, I'm slightly mixing the results; they don't seem to have been as consistent as they should have been in their experiments, and in particular the psychological difference between $900 and $1000 skews things. I don't think it alters the thrust of the assertion though; people treat options 1 and 2 the same, but 3 differently.