Anticipation and Choice Heuristics in the Dynamic Consumption of Pain Relief
Figure 4
Anticipation-discounting and dynamic utility maximization.
A Four anticipation-discounting functions. From left to right: predominant discounting, no discounting, predominant savoring, discounted savoring. The parameters of each function are displayed on the plot. B Simulated optimal consumption paths under the same four discount functions, with concave utility, U(c) = c0.75 Green circles represent simulated consumption paths for a fully naïve decision-maker (See Main Text). Red circles represent consumption for a fully sophisticated decision-maker. C Plans for future consumption made in the first three time periods for a naïve decision-maker. The red circles indicate planned consumption from the perspective of t = 1, the blue circles from the perspective of t = 2 and the green circles from the perspective of t = 3. Where discounting dominates (left panel), the naïve decision-maker consumes more than planned, where savoring dominates (right hand two panels), the naïve decision-maker consumes less than planned.