‘What is important is seldom urgent and what is urgent is seldom important’: a study of the strategic implications of the urgency effect in a competitive setting

Abstract

AbstractThe urgency effect refers to people’s tendency to choose a relatively unimportant task (with unambiguously low payoff) over a relatively important task (with unambiguously high payoff), when the former is spuriously framed as urgent. In this paper I study a simple model in which two payoff-maximising task suppliers compete for a population of heterogeneous decision-makers. Task suppliers offer tasks of various importance, and can exert costly effort to manipulate the perceived urgency of the offered tasks. Decision-makers are of two kinds: they either choose more important over less important tasks by disregarding the urgency frames (fully rational) or behave like fully rational decision-makers, except that they are subject to the urgency effect (boundedly rational). I study the unique symmetric equilibrium of the resulting game and derive the conditions under which the urgency effect has detrimental effects on the decision-makers’ welfare. Furthermore, I examine the implications of several policies aimed at correcting the failure, which include educating boundedly rational decision-makers and auditing task suppliers that use urgency framing.