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

Many of the most significant choices that people make are between vices, wh ich exchange small immediate rewards for large delayed costs, and virtues, which exchange small immediate costs for large delayed rewards. We investig ate the consequences of making a series of such choices either simultaneous ly or sequentially. We made two predictions. First, because many alternativ es chosen under simultaneous choice will only be experienced following a de lay, and because hyperbolic time discounting predicts that people will pref er delayed virtues but immediate vices, we predicted that people would choo se 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 'hig hbrow' and 'lowbrow' movies, and the other between 'instant-win' and 'prize -draw' lottery tickets. We conclude by posing the question of whether simul taneous or sequential choice results in decisions that more closely approxi mate what people 'really' want. Copyright (C) 1999 John Wiley & Sons, Ltd.