George Loewenstein, PhD

Co-Director, Roybal Pilot Program
Herbert A. Simon Professor of Economics and Psychology, Carnegie Mellon University
CHIBE-affiliated faculty member

George Loewenstein is an economist by training. His work brings psychological considerations to bear on models and problems that are central to economics. Loewenstein’s primary research focus is on intertemporal choice–decisions involving trade-offs between costs and benefits occurring at different points in time. Because most decisions have consequences that are distributed over time, the applications of intertemporal choice are numerous (e.g. saving behavior, consumer choice, labor supply). In the past, formal analyses of intertemporal choice in economics and other social science disciplines have been dominated by the discounted utility model. In his work, Loewenstein tries to identify deficiencies with this model, explain these deficiencies in psychological terms and propose alternative models. For example, he has sought to prove that the traditional belief that people are impatient (e.g. they like to experience good things earlier and bad things later) is often incorrect. In his research has found the opposite–people like to get bad things over with quickly, and they prefer for their situation to start bad and improve over time, rather than to start good and deteriorate. A second research focus examines why negotiations often result in impasse, even under favorable conditions (e.g. face-to-face negotiations, ample time, strong monetary incentives for settlement). A major part of this research revolves around self-serving assessments of fairness. We have found that negotiators often attempt to reach fair settlements, but their view of what is fair depends (in a self-serving fashion) on their role in the negotiation. A third recent focus is on people’s predictions of their own future feelings and behavior. In a series of papers, he has been developing the notion of a “cold-to-hot empathy gap.” When people are in a cold state (i.e., not hungry, sexually aroused, in pain, angry, etc.) they underestimate the impact of such “visceral” states on their own future behavior. Similar predictions apply to interpersonal predictions (when cold, it is difficult to predict the behavior of someone who is hot), to memory (when cold, it is difficult to make sense of one’s own past behavior when hot), and there are also analogous hot-to-cold empathy gaps.