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Cumulative Weighing of Time in Intertemporal Tradeoffs

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ABSTRACT

We examine preferences for sequences of delayed monetary gains. In the experimental literature, two prominent models have been advanced as psychological descriptions of preferences for sequences. In one model, the instantaneous utilities of the outcomes in a sequence are discounted as a function of their delays, and assembled into a discounted utility of the sequence. In the other model, the accumulated utility of the outcomes in a sequence is considered along with utility or disutility from improvement in outcome utilities and utility or disutility from the spreading of outcome utilities. Drawing on three threads of evidence concerning preferences for sequences of monetary gains, we propose that the accumulated utility of the outcomes in a sequence is traded off against the duration of utility accumulation. In our first experiment, aggregate choice behavior provides qualitative support for the tradeoff model. In three subsequent experiments, one of which incentivized, disaggregate choice behavior provides quantitative support for the tradeoff model in Bayesian model contests. One thread of evidence motivating the tradeoff model is that, when, in the choice between two single dated outcomes, it is conveyed that receiving less sooner means receiving nothing later, preference for receiving more later increases, but when it is conveyed that receiving more later means receiving nothing sooner, preference is left unchanged. Our results show that this asymmetric hidden-zero effect is indeed driven by those supporting the tradeoff model. The tradeoff model also accommodates all remaining evidence on preferences for sequences of monetary gains.

No MeSH data available.


Proportions of participants (above bars) lending increasingly stronger support for candidate models in Experiment 2 (top panel), Experiment 3 (center panel), and Experiment 4 (bottom panel). BFs = Bayes Factors; TM = Tradeoff Model; DIUM = Discounted Instantaneous Utility Model; SMNZ = No-Zero Sequences Model; SMZ = Zero Sequences Model.
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fig2: Proportions of participants (above bars) lending increasingly stronger support for candidate models in Experiment 2 (top panel), Experiment 3 (center panel), and Experiment 4 (bottom panel). BFs = Bayes Factors; TM = Tradeoff Model; DIUM = Discounted Instantaneous Utility Model; SMNZ = No-Zero Sequences Model; SMZ = Zero Sequences Model.

Mentions: Figure 2 depicts the proportions of participants whose support for one model over all other candidate models in the main contest is, by informal rules of thumb (Jeffreys, 1961; Wetzels et al., 2011), anecdotal (both Bayes Factors [BFs] greater than one), substantial (both BFs greater than three), strong (both BFs greater than 10), very strong (both BFs greater than 30), and decisive (both BFs greater than 100). TM receives the most support; for example, it receives substantial support from more than 40% of the participants, whereas the other candidate models together receive substantial support from fewer than 20% of the participants.


Cumulative Weighing of Time in Intertemporal Tradeoffs
Proportions of participants (above bars) lending increasingly stronger support for candidate models in Experiment 2 (top panel), Experiment 3 (center panel), and Experiment 4 (bottom panel). BFs = Bayes Factors; TM = Tradeoff Model; DIUM = Discounted Instantaneous Utility Model; SMNZ = No-Zero Sequences Model; SMZ = Zero Sequences Model.
© Copyright Policy - open-access
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4998108&req=5

fig2: Proportions of participants (above bars) lending increasingly stronger support for candidate models in Experiment 2 (top panel), Experiment 3 (center panel), and Experiment 4 (bottom panel). BFs = Bayes Factors; TM = Tradeoff Model; DIUM = Discounted Instantaneous Utility Model; SMNZ = No-Zero Sequences Model; SMZ = Zero Sequences Model.
Mentions: Figure 2 depicts the proportions of participants whose support for one model over all other candidate models in the main contest is, by informal rules of thumb (Jeffreys, 1961; Wetzels et al., 2011), anecdotal (both Bayes Factors [BFs] greater than one), substantial (both BFs greater than three), strong (both BFs greater than 10), very strong (both BFs greater than 30), and decisive (both BFs greater than 100). TM receives the most support; for example, it receives substantial support from more than 40% of the participants, whereas the other candidate models together receive substantial support from fewer than 20% of the participants.

View Article: PubMed Central - PubMed

ABSTRACT

We examine preferences for sequences of delayed monetary gains. In the experimental literature, two prominent models have been advanced as psychological descriptions of preferences for sequences. In one model, the instantaneous utilities of the outcomes in a sequence are discounted as a function of their delays, and assembled into a discounted utility of the sequence. In the other model, the accumulated utility of the outcomes in a sequence is considered along with utility or disutility from improvement in outcome utilities and utility or disutility from the spreading of outcome utilities. Drawing on three threads of evidence concerning preferences for sequences of monetary gains, we propose that the accumulated utility of the outcomes in a sequence is traded off against the duration of utility accumulation. In our first experiment, aggregate choice behavior provides qualitative support for the tradeoff model. In three subsequent experiments, one of which incentivized, disaggregate choice behavior provides quantitative support for the tradeoff model in Bayesian model contests. One thread of evidence motivating the tradeoff model is that, when, in the choice between two single dated outcomes, it is conveyed that receiving less sooner means receiving nothing later, preference for receiving more later increases, but when it is conveyed that receiving more later means receiving nothing sooner, preference is left unchanged. Our results show that this asymmetric hidden-zero effect is indeed driven by those supporting the tradeoff model. The tradeoff model also accommodates all remaining evidence on preferences for sequences of monetary gains.

No MeSH data available.