Discounting from a Distance: The Effect of Pronoun Drop on Intertemporal Decisions

Intertemporal decision-making has long been assumed to measure self-control, with prominent theories treating choices of smaller, sooner rewards as failed attempts to override immediate temptation. If this view is correct, people should be more confident in their intertemporal decisions when they “successfully” delay gratification than when they do not. In two pre- registered experiments with built-in replication, adult participants (n=117) made monetary intertemporal choices and rated their confidence in having made the right decisions. Contrary to assumptions of the self-control account, confidence was not higher when participants chose delayed rewards. Rather, participants were more confident in their decisions when possible rewards were further apart in time-discounted subjective value, closer to the present, and larger in magnitude. Demonstrating metacognitive insight, participants were more confident in decisions that better aligned with their independent valuation of possible rewards. Decisions made with less confidence were more prone to changes-of-mind and more susceptible to a patience-enhancing manipulation. Together, our results establish that confidence in intertemporal choice tracks uncertainty in estimating and comparing the value of possible rewards – just as it does in decisions unrelated to self-control. Our findings challenge self- control views and instead cast intertemporal choice as a form of value-based decision-making about future possibilities.

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The foreign-language discount effect: Using English increases intertemporal discount rates through more distant future perception

10.31219/osf.io/vrtf4 ◽

2021 ◽

Author(s):

Yuepei Xu ◽

Zhu-Yuan Liang

Keyword(s):

Decision Making ◽

Foreign Language ◽

Native Speakers ◽

Rational Decision ◽

Future Time ◽

Distant Future ◽

Rational Decision Making ◽

Intertemporal Preferences ◽

Intertemporal Decisions ◽

Effect Experiment

Although the foreign language effect (FLE) has been associated with more rational decision-making, we do not know whether it can exert this effect on intertemporal decisions. Native speakers of languages with a high future-time reference (FTR) have been found to produce higher rates of discounting, but we do not yet know whether intertemporal preferences can also be modulated when high FTR language is used by a foreign speaker. Across two experiments (N=486), we found that switching from a low-FTR native language (Chinese) to a high-FTR foreign language (English) was consistently linked with higher rates of discounting, what we call the foreign-language discount effect. These results, which run counter to the mechanism proposed by FLE (Experiment 1), show that a more distant future perception is the chief factor underlying the observed effect (Experiment 2). Our findings call for caution in the use of the FLE as a beneficial debiasing effect.

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The key role of quoted spreads in financial services and transactions

Economics and Business Letters ◽

10.17811/ebl.10.3.2021.208-216 ◽

2021 ◽

Vol 10 (3) ◽

pp. 208-216

Author(s):

Guillermo Peña

Keyword(s):

Financial Services ◽

Investment Decisions ◽

Value Added ◽

Gravity Equation ◽

Interesting Issue ◽

Financial Products ◽

The World ◽

Intertemporal Decisions ◽

Transaction Tax

Banking has driven the development of the world for centuries. An interesting issue to analyze is the optimal spread on financial products reflecting the value added that does not generate economic distortions for consumers in intertemporal decisions. Based on a gravity equation for these services, this paper examines the optimality of a modified Quoted Spread, the recently-proposed mobile-ratio, by assessing whether the pure interest expressed as a gravity equation between interests does not change after applying this spread. Results show that the mobile-ratio is the specification of the spread with no distortions on investment decisions. Regarding fiscal policy, this ratio plays a key role for both the Financial Transaction Tax and the VAT on financial services.

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The Buffer Stock Model

10.1093/acprof:oso/9780199383146.003.0007 ◽

2017 ◽

Author(s):

Tullio Jappelli ◽

Luigi Pistaferri

Keyword(s):

Marginal Utility ◽

Credit Constraints ◽

Liquidity Constraints ◽

Borrowing Constraints ◽

Precautionary Saving ◽

Buffer Stock ◽

Borrowing Constraint ◽

Stock Model ◽

Intertemporal Decisions ◽

Period Model

We analyze models that combine precautionary saving and liquidity constraints to provide a unified, more realistic treatment of intertemporal decisions. We start off with a simple three-period model to illustrate how the expectation of future borrowing constraints can induce precautionary saving even in scenarios in which marginal utility is linear. A more general model that allows liquidity constraints and precautionary saving to interact fully is the buffer stock model, of which there are two versions. One, developed by Deaton (1991), emphasizes the possibility that a prudent and impatient consumer may face credit constraints. The other, by Carroll (1997), features the same type of consumer but allows for the possibility of income falling to zero and so generating a natural borrowing constraint.

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The effect of music tempo on consumer impatience in intertemporal decisions

European Journal of Marketing ◽

10.1108/ejm-10-2017-0696 ◽

2019 ◽

Vol 53 (3) ◽

pp. 504-523

Author(s):

Kyu Kim ◽

Gal Zauberman

Keyword(s):

Design Methodology ◽

Laboratory Experiments ◽

Distance Judgment ◽

Temporal Distance ◽

Background Music ◽

Retail Managers ◽

Gift Certificate ◽

Slow Tempo ◽

Intertemporal Decisions ◽

Practical Implications

Purpose This paper aims to examine the effect of music tempo on impatience in intertemporal tradeoff decisions. It finds that fast (vs slow) tempo music increases impatience. This occurs because fast (vs slow) tempo music makes temporal distance, and hence the waiting time until the receipt of delayed benefits, feel subjectively longer. Design/methodology/approach The study tests the hypotheses through four laboratory experiments. Findings In Studies 1a (N = 88) and 1b (N = 98), the results demonstrate that when participants listen to fast (vs slow) tempo music, they judge temporal distance to be longer. In Study 2 (N = 94), the results demonstrate that when participants listen to fast (vs slow) tempo music, they become more impatient when considering a smartphone purchase. In Study 3 (N = 218), the results demonstrate that when participants listen to fast (vs slow) tempo music, they become more impatient when considering a gift certificate, and that this delay discounting effect is attributable to the change in their temporal distance judgment. Research limitations/implications The current research reports a novel factor that influences impatience in intertemporal decisions and temporal distance judgment. Practical implications This research provides useful guidelines for retail managers and marketers regarding the effect of background music in stores. Originality/value This is the first study demonstrating a music tempo effect on temporal distance judgment and impatience in intertemporal tradeoff decisions.

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