Annals of Health Law
STRATEGY AGAINST SMOKING
asked for an amount more than four times as high of $8.67. This suggests
that members of the latter group assigned greater chances of winning to the
ticket after having chosen it themselves.
d. Present Bias
The present bias, i.e., people perceiving immediate payoffs significantly
more salient than future payoffs instead of simply discounting them in a
time-consistent manner, has been shown in several studies. 101 It is
commonly attributed to a dual decision-making system: while the so-called
affective system prefers immediate gratification and sharply discounts all
future periods, the deliberative system tends to long-term plans with higher
discount factors. 102
e. Mental Accounting
Mental accounting is a mechanism to reduce complexity and typically
occurs unknowingly. 103 People tend to disregard or even ignore
dependencies between specific economically connected projects. Instead of
including all aspects of a situation in their entirety, people focus on one
“mental account” which only relates to a section. The accounts are each
administered for themselves with regard to relative gains and losses relating
to a neutral center of reference. Interconnections to other accounts are
101. See George Ainslie, Specious reward: A Behavioral Theory of Impulsiveness and
Impulse Control, 82 PSYCHOL. BULL. 463, 464 (1975); George A. Akerlof & Ross D.
Milbourne, The Short-Run Demand for Money: A New Look at an Old Problem, 72 AM.
ECON. REV. 35 passim (1982); B. Douglas Bernheim & Antonio Rangel, Addiction and Cue-Triggered Decision Processes, 94 AM. ECON. REV. 1558 passim (2004); See George
Loewenstein & Drazen Prelec, Anomalies in Intertemporal Choice: Evidence and an
Interpretation, 107 Q. J. ECON. 573 passim (1992); Samuel M. McClure, David I. Laibson &
George Loewenstein, Separate Neural Systems Value Immediate and Delayed Monetary
Rewards, 306 SCI. 503 passim (2004); Samuel M. McClure, Keith M. Ericson & David I.
Laibson, Time Discounting for Primary Rewards, 27 J. NEUROSCI. 5796 passim (2007); Ted
O’Donoghue & Matthew Rabin, Doing It Now or Later, 89 AM. ECON. REV. 103 passim
102. See, e.g., McClure et al., supra note 101, at 503 passim.
103. Richard H. Thaler, Toward a Positive Theory of Consumer Choice, 1 J. ECON. BEH.
AND ORGANIZATION 39 passim (1980); Richard H. Thaler, Mental Accounting and Consumer
Choice, 4 MKTG. SCI. 199 passim (1985); Richard H. Thaler, Mental Accounting Matters, 12
J. BEH. DECISION MAKING 183 passim (1999).
104. See Amos Tversky & Daniel Kahneman, The Framing of Decisions and the
Psychology of Choice, 211 SCI. 453, 457 (1981) (Tversky and Kahneman developed a
famous experiment to illustrate this phenomenon comparing two situations: in the first
participants were supposed to imagine standing at the cash point that they had lost their
ticket to a theatrical performance, in the second they lost the equivalent amount of money).