I ’ ll cross that bridge if I get to it : Focusing on the Near ( Certain ) Future ∗

In many important economic decisions under uncertainty, the expected-utility maximizing choice is ex post optimal only if certain later states are reached. We investigate whether, outside of discounting, subjects are biased towards options faring well in early-period comparisons. We conduct neutral-context laboratory experiments to systematically investigate this bias and its interaction with an endowment bias. We find that the ordering of payoffs matters. Compared to a frame in which a single draw from a known distribution determines subject outcome, a frame making explicit the temporal ordering of payoffs decreases choice of the option whose ex post optimality requires reaching later states. We also find a strong endowment effect. We conclude with the implication of these findings on annuity choice by a recent retiree, as both of these biases work against annuity purchase by the 401(k)-endowed retiree. JEL Classification: C91, D14, D81, G22, J26