Mixing virtue and vice: Combining the immediacy effect and the diversification heuristic

Abstract

Many of the most significant choices that people make are between vices, which exchange small immediate rewards for large delayed costs, and virtues, which exchange small immediate costs for large delayed rewards. We investigate the consequences of making a series of such choices either simultaneously or sequentially. We made two predictions. First, because many alternatives chosen under simultaneous choice will only be experienced following a delay, and because hyperbolic time discounting predicts that people will prefer delayed virtues but immediate vices, we predicted that people would choose more virtues in simultaneous than sequential choice. Second, due to the tendency to diversify portfolios of choices, we predicted a greater mix of virtues and vices in simultaneous than sequential choice. These predictions were confirmed in two experiments involving real choices; one between 'highbrow' and 'lowbrow' movies, and the other between 'instant-win' and 'prize-draw' lottery tickets. We conclude by posing the question of whether simultaneous or sequential choice results in decisions that more closely approximate what people 'really' want. Copyright ©1999 John Wiley & Sons, Ltd.