Time and outcome framing in intertemporal tradeoffs.

Abstract

A robust anomaly in intertemporal choice is the delay-speedup asymmetry: Receipts are discounted more, and payments are discounted less, when delayed than when expedited over the same interval. We developed 2 versions of the tradeoff model (Scholten & Read, 2010) to address such situations, in which an outcome is expected at a given time but then its timing is changed. The outcome framing model generalizes the approach taken by the hyperbolic discounting model (Loewenstein & Prelec, 1992): Not obtaining a positive outcome when expected is a worse than expected state, to which people are over-responsive, or hypersensitive, and not incurring a negative outcome when expected is a better than expected state, to which people are under-responsive, or hyposensitive. The time framing model takes a new approach: Delaying a positive outcome or speeding up a negative one involves a loss of time to which people are hypersensitive, and speeding up a positive outcome or delaying a negative one involves a gain of time to which people are hyposensitive. We compare the models on their quantitative predictions of indifference data from matching and preference data from choice. The time framing model systematically outperforms the outcome framing model.

Weighing Outcomes by Time or Against Time? Evaluation Rules in Intertemporal Choice

“…). Taking the geometric mean of δ is the same as taking the geometric means of x S and x L and computing δ from there, which means that the functional relation between outcomes and one‐period discount factors is preserved in the aggregate data (Scholten & Read, ). A full description of the 12 option pairs is given in Table .…”

“…In the exponential discounting model, the discount function is exponential, that is, and the value function is linear, that is, v ( x ) = x . The exponential discounting model predicts two basic discounting effects (Scholten & Read, ). First, the longer the delay, the larger the amount by which outcomes are discounted.…”

The Cambridge Handbook of Psychology and Economic Behaviour

“…However, diverse framing effects found in intertemporal choice have demonstrated violations of this principle of procedural invariance. The delay/speed-up asymmetry is that people tend to be more impatient when an intertemporal choice is described as SS being delayed to LL than when it is described as LL being expedited to SS (Loewenstein, 1988;Scholten and Read, 2013;Weber et al, 2007). The date/delay effect is that people tend to be less impatient when time is described with calendar dates than with the length of delays (LeBoeuf, 2006;Read et al, 2005).…”

The predictive accuracy of intertemporal‐choice models

“…Predictive accuracy is also valuable for basic research because it represents a measure of model quality that penalizes overfitting. Consider, by contrast, the usual procedure in studies that compare models of intertemporal choice, in which model parameters are estimated and model performance is compared with the same datasee, for example, Doyle and Chen (2012), Kirby and Marakovi c (1995), Myerson and Green (1995), and Madden et al (1999); contrast with Scholten and Read (2013) and Toubia, Johnson, Evgeniou, and Delqui e (2013). Under this procedure, models will not be penalized for mistaking noise in the data as reliable patterns.…”

“…That is, are intertemporal decisions in fact made by computing and comparing immediacy equivalents? Scholten and Read (e.g., , ) have investigated attribute‐based models as alternatives to discounting. In an attribute‐based model, alternatives are compared along various dimensions and the decision is then made by aggregating over these comparisons.…”