Intertemporal Similarity: Discounting as a Last Resort

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

Standard models of intertemporal choice assume that individuals discount future payoffs by integrating reward amounts and time delays to generate a discounted value. Alternative models propose that, rather than integrate across them, individuals compare within attributes (amounts and delays) to determine if differences in one attribute outweigh differences in another attribute. For instance, the similarity model 1) compares the two reward amounts to determine whether they are similar, 2) compares the similarity of the two time delays, and then 3) makes a decision based on these similarity judgments. Here, I tested discounting models against attribute-based models that use similarity judgments to make choices. I collected intertemporal choices and similarity judgments for the reward amounts and time delays from participants in three experiments. All experiments tested the ability of discounting and similarity models to predict intertemporal choices. Model generalization analyses showed that the best predicting models started with similarity judgments and then, if similarity failed to make a prediction, resorted to discounting models. Similarity judgments also matched intertemporal choice data demonstrating both the magnitude and sign effects, thereby accounting for behavioral data that contradict many discounting models. These results highlight the possibility that attribute-based models such as the similarity models provide alternatives to discounting that may offer insights into the process of making intertemporal choices.

Original languageEnglish (US)
Pages (from-to)12-24
Number of pages13
JournalJournal of Behavioral Decision Making
Volume29
Issue number1
DOIs
StatePublished - Jan 1 2016

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Reward
Aptitude
reward
Resorts
Discounting
experiment
Intertemporal choice
Similarity judgments
Similarity Judgments
Intertemporal Choice
ability
Time delay
time
Values

Keywords

  • Attribute-based decisions
  • Intertemporal choice
  • Process model
  • Similarity
  • Temporal discounting

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Arts and Humanities (miscellaneous)
  • Applied Psychology
  • Sociology and Political Science
  • Strategy and Management

Cite this

Intertemporal Similarity : Discounting as a Last Resort. / Stevens, Jeffrey R.

In: Journal of Behavioral Decision Making, Vol. 29, No. 1, 01.01.2016, p. 12-24.

Research output: Contribution to journalArticle

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