Mispredicting the hedonic benefits of segregated gains.

The hedonic benefit of a gain (e.g., receiving $100) may be increased by segregating it into smaller units that are distributed over time (e.g., receiving $50 on each of 2 days). However, if these units are too small (e.g., receiving 1 cent on each of 10,000 days), they may fall beneath the person's hedonic limen and have no hedonic benefit at all. Do people know where their limens lie? In 6 experiments, participants predicted that the hedonic benefit of a large gain would be increased by segregating it into smaller units, and they were right; but participants also predicted that the hedonic benefit of a small gain would be increased by segregating it into smaller units, and they were wrong. Segregation of small gains decreased rather than increased hedonic benefit. These experiments suggest that people may underestimate the value of the hedonic limen and thus may oversegregate small gains. 2007 APA