Behavioral Economics
Expert-defined terms from the Human Behavior Analysis course at LearnUNI. Free to read, free to share, paired with a professional course.
Anchoring Bias – The tendency to rely heavily on the first piece of infor… #
Related terms: availability heuristic, framing effect. Example: a consumer who sees a $1000 price first perceives $700 as a bargain. Application: pricing strategies in retail. Challenge: may lead to suboptimal choices if the anchor is arbitrary.
Availability Heuristic – A mental shortcut where people judge the frequen… #
Related terms: anchoring bias, representativeness heuristic. Example: after hearing news of a plane crash, a traveler overestimates the risk of flying. Application: risk communication in public health. Challenge: can distort risk perception when vivid events are rare.
Behavioral Game Theory – The study of how real people behave in strategic… #
Related terms: nudge theory, experimental economics. Example: in a public goods game, participants often contribute less than the socially optimal amount due to free‑rider concerns. Application: designing mechanisms for collective action. Challenge: laboratory findings may not fully translate to complex real‑world environments.
Bounded Rationality – The concept that individuals aim to make rational c… #
Related terms: heuristics, satisficing. Example: a shopper selects the first acceptable laptop rather than evaluating every model. Application: simplifying choice architectures. Challenge: distinguishing between rational simplification and bias‑driven errors.
Choice Architecture – The organization of the context in which people mak… #
Related terms: nudge, default settings. Example: placing healthier foods at eye level in a cafeteria encourages better dietary choices. Application: policy design for public welfare. Challenge: ethical concerns about manipulation and autonomy.
Commitment Device – A mechanism that helps individuals stick to long‑term… #
Related terms: self‑control, precommitment. Example: a person deposits money into a savings account that penalizes early withdrawal. Application: encouraging retirement savings. Challenge: designing devices that are effective yet not overly restrictive.
Conformity Bias – The tendency to align one’s attitudes, beliefs, and beh… #
Related terms: social proof, herding. Example: investors buying a stock because many others are doing so, despite lacking personal analysis. Application: marketing campaigns that showcase popularity. Challenge: can amplify bubbles and market volatility.
Default Effect – The propensity to accept pre‑selected options as the pat… #
Related terms: choice architecture, opt‑out. Example: organ donation programs that default to “donate” see higher participation rates. Application: increasing enrollment in beneficial programs. Challenge: ensuring defaults reflect individuals’ true preferences.
Delay Discounting – The preference for smaller, immediate rewards over la… #
Related terms: hyperbolic discounting, present bias. Example: choosing to spend money now rather than saving for retirement. Application: designing interventions that front‑load benefits. Challenge: balancing short‑term incentives with long‑term welfare.
Endowment Effect – The phenomenon where people assign higher value to obj… #
Related terms: loss aversion, status quo bias. Example: a homeowner demands more than market price for a house they own. Application: pricing strategies in negotiation. Challenge: may lead to inefficient trade and market stickiness.
Escalation of Commitment – The tendency to continue investing in a failin… #
Related terms: sunk cost fallacy, status quo bias. Example: a company pours more resources into a losing product line. Application: decision reviews and stop‑loss policies. Challenge: overcoming emotional attachment to past choices.
Expected Utility Theory – A normative model that predicts that rational a… #
Related terms: risk aversion, prospect theory. Example: investors select portfolios maximizing expected monetary return adjusted for risk. Application: financial modeling. Challenge: empirical violations such as loss aversion and probability weighting.
Framing Effect – The influence of how choices are presented (gain vs #
loss framing) on decision outcomes. Related terms: anchoring bias, prospect theory. Example: a medical treatment described as “90% survival” leads to higher acceptance than “10% mortality.” Application: health communication. Challenge: ethical use of framing to avoid manipulation.
Hyperbolic Discounting – A time‑inconsistent discounting pattern where th… #
Related terms: present bias, delay discounting. Example: a smoker chooses a cigarette now rather than quitting for future health benefits. Application: structuring incentives that provide early rewards. Challenge: predicting long‑term behavior from short‑term preferences.
Loss Aversion – The observation that losses loom larger than equivalent g… #
Related terms: endowment effect, prospect theory. Example: a trader holds a losing stock longer to avoid realizing a loss. Application: designing insurance products that emphasize loss avoidance. Challenge: can cause over‑conservatism and missed opportunities.
Mental Accounting – The cognitive process of compartmentalizing money in… #
Related terms: budgeting, self‑control. Example: treating a tax refund as “extra” money for a vacation rather than applying it to debt. Application: financial planning tools that segment funds. Challenge: may lead to suboptimal allocation across accounts.
Moral Hazard – The situation where an individual’s risk‑taking behavior… #
Related terms: principal‑agent problem, adverse selection. Example: a driver who drives recklessly after purchasing comprehensive car insurance. Application: designing contracts with deductibles. Challenge: balancing coverage with incentives for responsible behavior.
Nudge Theory – A framework that uses subtle changes in the environment to… #
Related terms: choice architecture, behavioral intervention. Example: automatically enrolling employees in retirement plans while allowing opt‑out. Application: public policy, health promotion. Challenge: ensuring nudges respect autonomy and are transparent.
Prospect Theory – A descriptive model of decision making under risk, hig… #
Related terms: loss aversion, framing effect. Example: investors over‑react to market drops more than they celebrate equivalent gains. Application: explaining asset pricing anomalies. Challenge: integrating the model with complex, multi‑stage decisions.
Reciprocity Norm – The social rule that obliges individuals to return fav… #
Related terms: social proof, trust. Example: a company offers a free sample, increasing the likelihood of purchase. Application: marketing promotions and charitable campaigns. Challenge: overuse can diminish perceived sincerity.
Regret Theory – A model that incorporates anticipated regret into decisio… #
Related terms: loss aversion, anticipatory emotions. Example: a consumer delays buying a product fearing later regret if a better model appears. Application: limited‑time offers to reduce procrastination. Challenge: measuring and predicting regret accurately.
Representativeness Heuristic – A mental shortcut where individuals judge… #
Related terms: availability heuristic, conjunction fallacy. Example: assuming a quiet person is less likely to be a salesperson despite statistics. Application: risk assessment training. Challenge: leads to systematic bias in probability judgments.
Risk Aversion – The preference for certainty over uncertainty, causing in… #
Related terms: expected utility theory, prospect theory. Example: choosing a government bond over a volatile stock. Application: portfolio diversification. Challenge: may prevent beneficial entrepreneurial activities.
Self‑Control Problem – The difficulty individuals face in aligning short‑… #
Related terms: delay discounting, commitment device. Example: overeating despite a diet plan. Application: pre‑commitment contracts for weight loss. Challenge: designing interventions that are both effective and acceptable.
Satisficing – The strategy of selecting an option that meets a minimum th… #
Related terms: bounded rationality, heuristics. Example: buying the first smartphone that satisfies required features. Application: simplifying consumer decision processes. Challenge: may lead to missed higher‑value alternatives.
Social Proof – The influence of observing others’ behavior on one’s own c… #
Related terms: conformity bias, reciprocity norm. Example: a product with many positive reviews attracts more buyers. Application: online marketing. Challenge: can amplify misinformation and herd behavior.
Status Quo Bias – The preference for maintaining current conditions, lead… #
Related terms: endowment effect, loss aversion. Example: employees staying with a suboptimal health plan because switching seems daunting. Application: redesigning enrollment processes to reduce inertia. Challenge: overcoming entrenched habits.
Sunk Cost Fallacy – The erroneous reasoning that further investment is ju… #
Related terms: escalation of commitment, loss aversion. Example: continuing a project because of past spending despite poor outlook. Application: decision‑audit checklists. Challenge: cultivating a culture that discards past losses objectively.
Temporal Discounting – The reduction in present value of future rewards,… #
Related terms: delay discounting, hyperbolic discounting. Example: preferring $50 today over $60 in a month. Application: structuring payment plans with early‑reward incentives. Challenge: aligning incentives with long‑term welfare.
Thaler’s Mental Accounting – A framework describing how people segment mo… #
Related terms: budgeting, self‑control. Example: treating a tax refund as “bonus” money for leisure spending. Application: designing financial apps that create separate “savings jars.” Challenge: may cause inefficient allocation across accounts.
Time Inconsistency – The phenomenon where preferences change over time, l… #
Related terms: present bias, hyperbolic discounting. Example: planning to exercise next week but skipping it when the day arrives. Application: commitment contracts that lock in future behavior. Challenge: predicting when inconsistency will arise.
Utility Function – A mathematical representation of a person’s preference… #
Related terms: expected utility theory, risk aversion. Example: a concave utility function reflects diminishing marginal utility of wealth. Application: economic modeling of consumer demand. Challenge: accurately estimating individual utility curves.
Value Function (Prospect Theory) – The component of prospect theory that… #
Related terms: loss aversion, framing effect. Example: a $100 loss feels more painful than a $100 gain feels enjoyable. Application: designing incentive schemes that emphasize loss avoidance. Challenge: individual differences in reference points.
Willingness to Pay (WTP) – The maximum amount an individual is prepared t… #
Related terms: consumer surplus, contingent valuation. Example: a commuter’s WTP for reduced travel time. Application: cost‑benefit analysis of public projects. Challenge: eliciting true WTP without strategic bias.
Willingness to Accept (WTA) – The minimum compensation an individual requ… #
Related terms: endowment effect, loss aversion. Example: a homeowner’s WTA for allowing a noisy construction nearby. Application: negotiating compensation in eminent domain cases. Challenge: large gaps often observed between WTP and WTA.
Zero‑Price Effect – The tendency for people to overvalue free items, even… #
Related terms: anchoring bias, loss aversion. Example: downloading a free app versus paying $1 for a similar one. Application: promotional strategies using “free” offers. Challenge: can lead to overconsumption or reduced perceived value.
3‑Stage Decision Model – A behavioral framework describing the process of… #
Related terms: choice architecture, bounded rationality. Example: a consumer noticing a need for a new laptop, researching models, then purchasing. Application: marketers aligning messages with each stage. Challenge: consumers may skip stages or revert to heuristics.
4‑C Model of Consumer Behavior – An analytical tool focusing on (1) cogni… #
Related terms: mental accounting, social proof. Example: a buyer’s rational evaluation (cognition), emotional response (affect), intention to purchase (conation), and cultural norms. Application: comprehensive market segmentation. Challenge: measuring each component reliably.
Adaptive Expectations – The hypothesis that people form expectations of f… #
Related terms: rational expectations, learning models. Example: inflation expectations updating after each quarterly report. Application: macro‑economic policy forecasting. Challenge: lag in adjustment can cause systematic errors.
Altruism (Behavioral Economics) – The preference for others’ welfare, inf… #
Related terms: reciprocity norm, social preferences. Example: donating to charity without direct personal benefit. Application: designing public goods funding mechanisms. Challenge: distinguishing true altruism from reputation seeking.
Ambiguity Aversion – The tendency to avoid options with unknown probabili… #
Related terms: Ellsberg paradox, risk aversion. Example: investors preferring a stock with known volatility over a novel venture with uncertain outcomes. Application: structuring financial products with clearer risk disclosures. Challenge: may limit diversification and innovative investment.
Anthropomorphic Pricing – Using human‑like descriptors in price presentat… #
g., “just $5”) to trigger emotional responses and affect perceived fairness. Related terms: framing effect, price anchoring. Example: “Only $9.99 for a limited time!” influences purchase urgency. Application: retail pricing tactics. Challenge: potential consumer backlash if perceived as manipulative.
Behavioural Public Policy – The application of behavioral insights to des… #
Related terms: nudge theory, choice architecture. Example: default enrollment in pension schemes to increase retirement savings. Application: health, environment, and finance sectors. Challenge: ensuring transparency and evaluating long‑term effectiveness.
Bounded Willpower – The concept that self‑control is limited and can be d… #
Related terms: self‑control problem, ego depletion. Example: a shopper’s impulse purchase after a long day of work. Application: structuring environments to reduce temptations. Challenge: measuring willpower reserves and designing sustainable interventions.
Behavioural Spillover – The phenomenon where a behavioral intervention in… #
Related terms: moral licensing, habit formation. Example: individuals who start recycling may also reduce energy consumption. Application: designing multi‑benefit programs. Challenge: predicting direction and magnitude of spillovers.
Cognitive Dissonance – The uncomfortable mental state arising from holdin… #
Related terms: self‑justification, attitude change. Example: a smoker rationalizing the habit by downplaying health risks. Application: persuasive communication that aligns messages with existing beliefs. Challenge: resistance when dissonance is high.
Commitment Bias – The inclination to stay consistent with prior commitmen… #
Related terms: status quo bias, sunk cost fallacy. Example: continuing a subscription because the initial sign‑up was public. Application: loyalty programs that lock in customers. Challenge: may hinder adaptation to better alternatives.
Counterfactual Thinking – The mental simulation of alternative outcomes t… #
Related terms: regret theory, mental accounting. Example: regretting not investing in a stock that later surged. Application: feedback design to reduce harmful comparison. Challenge: can lead to excessive rumination and stress.
Decoy Effect (Asymmetric Dominance) – The influence of adding an inferior… #
Related terms: choice architecture, framing effect. Example: a medium popcorn size priced close to large makes large seem like better value. Application: product line design. Challenge: ethical concerns about artificially steering choices.
Descriptive Norms – Information about how most people behave in a given c… #
Related terms: social proof, conformity bias. Example: signs indicating “most guests reuse towels” increase towel reuse in hotels. Application: sustainability campaigns. Challenge: ensuring accurate data to avoid backlash.
Discounted Utility Model – A framework that aggregates future utilities u… #
Related terms: temporal discounting, present bias. Example: evaluating a pension plan by discounting future payouts to present value. Application: cost‑benefit analysis of long‑term projects. Challenge: misrepresenting actual human discounting patterns.
Endogenous Preferences – The idea that preferences can be shaped by exper… #
Related terms: social preferences, behavioral change. Example: taste for healthy food develops after repeated exposure. Application: educational programs that modify preferences. Challenge: measuring the causal impact of interventions on preference formation.
Equity Theory – A model explaining motivation based on perceived fairness… #
Related terms: social comparison, reciprocity norm. Example: an employee feeling dissatisfied when peers receive higher pay for similar work. Application: compensation design. Challenge: individual differences in equity perception.
Experimental Economics – The use of controlled laboratory or field experi… #
Related terms: behavioral game theory, field experiments. Example: testing the impact of default options on retirement savings participation. Application: evidence‑based policy design. Challenge: external validity and replicability across settings.
Focal Point (Schelling Point) – A solution that people naturally converge… #
Related terms: coordination games, social norms. Example: meeting at noon in a town square when no time is specified. Application: designing mechanisms for collective coordination. Challenge: cultural differences may alter focal points.
Framing Bias – A distortion in judgment caused by the way information is… #
Related terms: anchoring bias, choice architecture. Example: describing a medical test as “95% accurate” vs. “5% error rate” leads to different acceptance rates. Application: risk communication. Challenge: ensuring balanced presentation without hidden agendas.
Herding Behavior – The tendency of individuals to follow the actions of a… #
Related terms: conformity bias, social proof. Example: investors buying a stock simply because many others are buying it. Application: monitoring systemic risk in financial markets. Challenge: distinguishing rational imitation from irrational cascades.
Hyperbolic Discounting vs #
Exponential Discounting – Comparison of two discounting models; hyperbolic reflects decreasing impatience over time, while exponential assumes constant discount rate. Related terms: present bias, temporal discounting. Example: choosing $100 today over $110 tomorrow (hyperbolic) but being indifferent between $100 today and $110 in a year (exponential). Application: designing time‑varying incentives. Challenge: fitting the appropriate model to observed behavior.
Identity Economics – The study of how personal and group identities influ… #
Related terms: social preferences, norms. Example: consumers preferring locally produced goods to reinforce community identity. Application: branding strategies that align with target identities. Challenge: measuring identity strength and its causal impact.
Illusion of Control – The propensity to overestimate one’s influence over… #
Related terms: overconfidence bias, gambler’s fallacy. Example: a trader believing they can predict market moves despite randomness. Application: risk management training. Challenge: mitigating overconfidence without discouraging legitimate initiative.
Implicit Association – Unconscious associations between concepts that aff… #
Related terms: bias, attitude formation. Example: quicker pairing of “male” with “career” than “female” with “career.” Application: diversity training interventions. Challenge: translating implicit measures into behavioral change.
Incentive Compatibility – Designing mechanisms where participants find it… #
Related terms: principal‑agent problem, mechanism design. Example: a tax system where reporting true income maximizes net payoff. Application: public policy and contract design. Challenge: ensuring robustness against strategic manipulation.
Intertemporal Choice – Decisions involving trade‑offs among costs and ben… #
Related terms: delay discounting, present bias. Example: choosing between a $500 bonus today or a $600 bonus in a year. Application: retirement planning. Challenge: accounting for inconsistent preferences over time.
Loss Framing – Presenting outcomes in terms of potential losses rather th… #
Related terms: framing effect, prospect theory. Example: “Avoid a $50 penalty” versus “Earn a $50 reward.” Application: compliance programs. Challenge: overuse may cause anxiety and resistance.
Market Efficiency (Behavioral Perspective) – The notion that markets refl… #
Related terms: efficient market hypothesis, behavioral finance. Example: stock price overreaction to earnings announcements due to optimism bias. Application: active trading strategies. Challenge: distinguishing persistent anomalies from noise.
Mental Models – Internal representations that simplify complex reality, g… #
Related terms: heuristics, bounded rationality. Example: a consumer’s mental model of “quality” based on brand reputation. Application: educational tools that reshape inaccurate mental models. Challenge: overcoming entrenched misconceptions.
Mere Exposure Effect – The tendency to develop a preference for things si… #
Related terms: familiarity bias, social proof. Example: repeated advertising increases product likability. Application: branding campaigns. Challenge: diminishing returns after high exposure levels.
Motivation Crowding Out – The reduction of intrinsic motivation when exte… #
Related terms: extrinsic incentives, self‑determination theory. Example: offering payment for blood donation may reduce altruistic donations. Application: policy design that balances incentives with intrinsic drives. Challenge: measuring the net effect of incentives.
Neuroeconomics – An interdisciplinary field combining neuroscience, psych… #
Related terms: behavioral economics, fMRI studies. Example: identifying brain regions activated during risk assessment. Application: tailoring interventions to neural reward pathways. Challenge: translating neural findings into practical policies.
Normative vs #
Descriptive Models – Distinction between how decisions should be made according to rational theory (normative) and how they are actually made (descriptive). Related terms: expected utility theory, prospect theory. Example: rational agent would diversify; real investors often concentrate. Application: bridging gaps through nudges. Challenge: integrating insights without sacrificing predictive power.
Overconfidence Bias – The tendency to overestimate one’s knowledge, abili… #
Related terms: illusion of control, self‑attribution bias. Example: entrepreneurs believing their venture will succeed despite low odds. Application: training programs that provide calibrated feedback. Challenge: reducing overconfidence without discouraging ambition.
Peak‑End Rule – The tendency to judge an experience largely based on its… #
Related terms: memory bias, affect heuristic. Example: a short, painful medical procedure followed by a pleasant recovery is remembered more positively than a longer, less painful one. Application: designing customer experiences. Challenge: ensuring ethical use of memory manipulation.
Prospect Theory – Value Function – A component describing diminishing sen… #
Related terms: loss aversion, framing effect. Example: a $10 loss feels more painful than a $10 gain feels satisfying. Application: structuring insurance deductibles. Challenge: individual variation in curvature and reference points.
Prospect Theory – Probability Weighting – The distortion where people ove… #
Related terms: overestimation of rare events, risk perception. Example: overvaluing lottery tickets despite low odds. Application: lottery design and public health warnings. Challenge: calibrating messages to correct misperceptions.
Reference Dependence – The principle that outcomes are evaluated relative… #
Related terms: prospect theory, loss aversion. Example: salary increase feels more satisfactory when compared to the previous salary rather than the market average. Application: compensation negotiation tactics. Challenge: shifting reference points strategically.
Regret Aversion – The desire to avoid future regret, influencing present… #
Related terms: loss aversion, anticipatory emotions. Example: opting out of a risky investment to avoid possible regret if it fails. Application: product warranties that reduce perceived regret. Challenge: quantifying regret intensity across individuals.
Risk Perception – The subjective judgment individuals make about the seve… #
Related terms: availability heuristic, ambiguity aversion. Example: fearing airplane crashes more than car accidents despite lower statistics. Application: safety campaigns that align perception with actual risk. Challenge: overcoming emotional biases.
Self‑Attribution Bias – The tendency to attribute successes to internal f… #
Related terms: overconfidence bias, self‑serving bias. Example: a student credits intelligence for a good grade but blames a poor grade on a tough exam. Application: feedback systems that promote realistic self‑assessment. Challenge: fostering balanced attribution for growth.
Social Identity Theory – Explains how group membership shapes self‑concep… #
Related terms: identity economics, norms. Example: consumers preferring products made by members of their own cultural group. Application: targeted marketing. Challenge: avoiding exclusionary practices.
Time Preference – The degree to which individuals value present consumpti… #
Related terms: present bias, temporal discounting. Example: preferring $100 now to $110 in a month. Application: interest rate design for savings accounts. Challenge: aligning policy rates with heterogeneous time preferences.
Utility Maximization – The principle that agents choose actions that prov… #
Related terms: expected utility theory, behavioral deviations. Example: a consumer selecting a bundle that maximizes perceived benefit per price. Application: demand forecasting. Challenge: accounting for non‑monetary utilities and biases.
Welfare Economics (Behavioral Lens) – The study of how policies affect ov… #
Related terms: nudge theory, behavioral welfare. Example: evaluating a tax credit’s impact on low‑income households when they exhibit present bias. Application: cost‑effectiveness analysis. Challenge: measuring welfare when preferences are unstable.
Zero‑Sum Thinking – The belief that one party’s gain must come at another… #
Related terms: competition, social preferences. Example: investors viewing market share as fixed, leading to aggressive tactics. Application: negotiation strategies. Challenge: encouraging cooperative outcomes where possible.
1‑Shot vs #
Repeated Games – Distinction between single interaction scenarios and those where players anticipate future encounters, affecting strategy choice. Related terms: behavioral game theory, trust. Example: cooperating in a repeated prisoner's dilemma to build reputation. Application: long‑term supplier contracts. Challenge: modeling expectations of future play accurately.
2‑Stage Decision Process – A simplified framework where individuals first… #
Related terms: choice architecture, bounded rationality. Example: a shopper first decides on budget, then picks a product within that range. Application: segmenting marketing messages. Challenge: real‑world decisions may involve more iterative stages.
3‑C Model of Consumer Decision – Focuses on (1) cognition, (2) emotion, a… #
Related terms: affect heuristic, mental accounting. Example: a buyer’s rational evaluation, emotional attachment, and situational constraints shape the final purchase. Application: holistic advertising strategies. Challenge: quantifying each component’s weight.
Acquisition Utility – The perceived benefit derived from obtaining a new… #
Related terms: status seeking, social proof. Example: the excitement of buying the latest smartphone, beyond its functional use. Application: product launch timing. Challenge: distinguishing acquisition excitement from long‑term satisfaction.
Attitude–Behaviour Gap – The discrepancy between expressed attitudes and… #
Related terms: cognitive dissonance, social desirability bias. Example: claiming to recycle but rarely doing so. Application: designing interventions that bridge intention and action. Challenge: measuring true behavior versus self‑report.
Bias Toward the Status Quo – The overall inclination to avoid change, lea… #
Related terms: status quo bias, loss aversion. Example: staying with a suboptimal insurance plan because changing seems effortful. Application: simplifying plan switching processes. Challenge: overcoming deep‑rooted habits.
Behavioral Externalities – Spillover effects of an individual’s behavior… #
Related terms: social norms, public goods. Example: one driver’s aggressive style increases accident risk for others. Application: regulation of harmful practices. Challenge: quantifying externalities for policy.
Behavioral Pricing – Pricing tactics that exploit cognitive biases, such… #
Related terms: price anchoring, psychological pricing. Example: $9.99 perceived as significantly cheaper than $10. Application: retail pricing strategy. Challenge: maintaining credibility while leveraging bias.
Bounded Agency – The limitation of agents’ ability to act on preferences… #
Related terms: bounded rationality, choice architecture. Example: a busy parent unable to research the best health insurance plan. Application: decision aids and default options. Challenge: identifying the most binding constraints.
Choice Overload – The phenomenon where too many options lead to decision… #
Related terms: paradox of choice, heuristics. Example: a supermarket aisle with 50 cereal brands causing shoppers to defer purchase. Application: curating product lines. Challenge: balancing variety with simplicity.
Commitment Consistency – The drive to act consistently with prior commitm… #
Related terms: commitment bias, reciprocity norm. Example: a small initial request increases likelihood of agreeing to a larger later request. Application: fundraising campaigns. Challenge: ethical considerations of manipulation.
Construal Level Theory – Explains how psychological distance (temporal, s… #
Construal Level Theory – Explains how psychological distance (temporal, spatial, social) influences abstract versus concrete thinking,