Why we value things more as we are about to lose them: A reference-based theory

Area of Science:

• Cognitive Psychology
• Behavioral Economics
• Decision Science

Background:

• Common observation suggests increased appreciation for items/people when loss is imminent.
• Examples include valuing scarce resources or limited-time opportunities more highly.

Purpose of the Study:

• To investigate the psychological dynamics of why subjective value increases as future availability declines.
• To develop and test a computational model explaining reference-dependent valuation near deadlines.

Main Methods:

• Introduction of a computational model to simulate subjective value changes.
• Analysis of how shifting reference standards and uncertainty affect valuation.
• Examination of effort-based choices in response to diminishing opportunities.

Main Results:

• Model demonstrates increased subjective value as expected future availability decreases near a deadline.
• Simulations show rising subjective value enhances effort to secure opportunities.
• Declining reference points mechanistically explain shifts in value and effort.

Conclusions:

• A declining reference point near deadlines drives increased subjective value and effort.
• This provides a mechanistic explanation for scarcity, FOMO, and related decision-making phenomena.
• The theory offers testable insights into reference-dependent behavior in various contexts.