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Cognitive linguistic studies have found that people perceive time to be intertwined with space. Western consumers, in particular, visualize time on a horizontal spatial axis, with past events on the left and future events on the right. Underexplored, however, is whether and how space-time associations influence future time-related judgments and decisions. For instance, can spatial location cues affect intertemporal decisions? Integrating cognitive linguistics, time psychology, and intertemporal choice, the authors demonstrate across five studies that when choices are displayed horizontally (vs. vertically), consumers more steeply discount future outcomes. Furthermore, this effect is serially mediated by attention to time and anticipated duration estimates. Specifically, the authors propose and demonstrate that horizontal (vs. vertical) temporal displays enhance the amount of attention devoted to considering the time delay and lead consumers to overestimate how long it will take to receive benefits. This research has important implications for consumers who want to forgo immediate gratification and for firms that need to manage consumers' time perceptions.

Many people fail to save what they will need for retirement. Research on excessive discounting of the future suggests that removing the lure of immediate rewards by precommitting to decisions or elaborating the value of future rewards both can make decisions more future oriented. The authors explore a third and complementary route, one that deals not with present and future rewards but with present and future selves. In line with research that shows that people may fail, because of a lack of belief or imagination, to identify with their future selves, the authors propose that allowing people to interact with age-progressed renderings of themselves will cause them to allocate more resources to the future. In four studies, participants interacted with realistic computer renderings of their future selves using immersive virtual reality hardware and interactive decision aids. In all cases, those who interacted with their virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones.

One of the most basic predictions of almost any model of crime is that individual time preferences matter. However, empirical evidence on this fundamental property is essentially nonexistent. To our knowledge, this paper provides the first pieces of evidence on the link between time discounting and crime. We use a unique dataset that combines a survey-based measure of time discount rates (at age 13) with detailed longitudinal register data on criminal behavior spanning over 18 y. Our results show that individuals with short time horizons have a significantly higher risk of criminal involvement later in life. The magnitude of the relationship is substantial and corresponds to roughly one-third of the association between intelligence and crime.

Recent financial studies often assume that agents have Epstein-Zin preferences-preferences that require agents to care about when uncertainty is resolved. Under this \"recursive-preference\" framework, the preference for uncertainty resolution is entirely determined by an agent's preferences for risk and intertemporal substitution. To test the implications of this model, this paper presents an experiment designed to elicit subject preferences on risk, time, intertemporal substitution, and uncertainty resolution. Results reveal that most subjects prefer early resolution of uncertainty and have relative risk aversion greater than the reciprocal of the elasticity of intertemporal substitution, consistent with the predictions by recursive preferences. Subjects are classified in a finite mixture model by their risk, time, and intertemporal-substitution parameters. Regression results show that types predicted by the Epstein-Zin model to prefer early resolution choose early resolution with 20%-50% higher probability. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2013.1794 This paper was accepted by Brad Barber, finance.

Revealed preference is the dominant approach for inferring preferences, but it is limited in that it relies solely on discrete choice data. When a person chooses one alternative over another, we cannot infer the strength of their preference or predict how likely they will be to make the same choice again. However, the choice process also produces response times (RTs), which are continuous and easily observable. It has been shown that RTs often decrease with strength-of-preference. This is a basic property of sequential sampling models such as the drift diffusion model. What remains unclear is whether this relationship is sufficiently strong, relative to the other factors that affect RTs, to allow us to reliably infer strength-of-preference across individuals. Using several experiments, we show that even when every subject chooses the same alternative, we can still rank them based on their RTs and predict their behavior on other choice problems. We can also use RTs to predict whether a subject will repeat or reverse their decision when presented with the same choice problem a second time. Finally, as a proof-of-concept, we demonstrate that it is also possible to recover individual preference parameters from RTs alone. These results demonstrate that it is indeed possible to use RTs to infer preferences.

This paper proposes a novel account of impatience: People pay more attention to the opportunity costs of choosing larger, later rewards than to the opportunity costs of choosing smaller, sooner ones. Eight studies show that when the opportunity costs of choosing smaller, sooner rewards are subtly highlighted, people become more patient, whereas when the opportunity costs of choosing larger, later rewards are highlighted this has no effect. This pattern is robust to variations in the choice task, to the participant population, and to whether the choices are incentivized or hypothetical. We argue that people are naturally aware of the opportunity costs of delayed rewards but pay less attention to those associated with smaller, sooner ones. We conclude by discussing implications for theory and policy. Data, as supplemental material, are available at https://doi.org/10.1287/mnsc.2016.2547 . This paper was accepted by Yuval Rottenstreich, judgment and decision making .

Many studies show that time preference data from experiments and surveys are related to field behavior. Time preference measures in these studies typically depend simultaneously on utility curvature, the level of impatience, and the change in the level of impatience. Thus, these studies do not allow one to establish which of these three components drive(s) the field behavior of interest. Of these components, the change in the level of impatience is theoretically thought to be the main driver of time inconsistencies and self-control problems. To test this theoretical presumption, one has to measure the change in the level of impatience independently from utilities and levels of impatience. This paper introduces a measure of the degree of decreasing impatience, the DI-index. It measures the change of impatience independently from the level of impatience and independently from utility. It can also be used to test various discounting models. An experiment finds no correlation between the degree of decreasing impatience and self-reported self-control problems in daily life, suggesting that changing impatience is not the sole driver of self-control problems. Data and the supplementary material are available at https://doi.org/10.1287/mnsc.2017.3015 . This paper was accepted by Manel Baucells, decision analysis.

We implement a dynamic asset pricing experiment in the spirit of Lucas (1978) with storable assets and non-storable cash. In the first treatment, we impose diminishing marginal returns to cash to incentivize consumption smoothing across periods. We find that subjects use the asset to smooth consumption, although the asset trades at a discount relative to the risk-neutral fundamental price. This under-pricing is a departure from the asset price “bubbles” observed in the large experimental asset pricing literature originating with Smith et al. (1988) and can be rationalized by considering subjects’ risk aversion with respect to uncertain money earnings. In a second treatment, with no induced motivation for trade à la the Smith et al. design, we find that the asset trades at a premium relative to its expected value and that shareholdings are highly concentrated. Elimination of asset price uncertainty in additional experimental treatments serves to reinforce the same observations, and suggests that speculative behaviour explains the departure of prices from fundamental value in the absence of a consumption-smoothing motive for asset trades.

Would you rather receive your salary in one paycheck in one month or—one half of it in one month and the other half paid out in slightly more than one month? The first option dominates the second option in terms of first-order temporal dominance. Yet, standard models of intertemporal choice such as discounted utility (also known as constant or exponential discounting), hyperbolic or quasi-hyperbolic discouning with a concave utility function predict a preference for the dominated alternative. This paper presents a minor modification of these standard models to avoid such violations of first-order temporal dominance. Applications to optimal savings and evaluation of a perpetuity are provided.

We estimate discount rates of 555 subjects using a laboratory task and find that these individual discount rates predict inter-individual variation in field behaviors (e.g., exercise, BMI, smoking). The correlation between the discount rate and each field behavior is small: none exceeds 0.28 and many are near 0. However, the discount rate has at least as much predictive power as any variable in our dataset (e.g., sex, age, education). The correlation between the discount rate and field behavior rises when field behaviors are aggregated: these correlations range from 0.09-0.38. We present a model that explains why specific intertemporal choice behaviors are only weakly correlated with discount rates, even though discount rates robustly predict aggregates of intertemporal decisions.