The Fragility of Time: Time-Insensitivity and Valuation of the Near and Far Future

We propose that the temporal dimension is fragile in that choices are insufficiently sensitive to it, and second, such sensitivity as exists is exceptionally malleable, unlike other dimensions such as money, which are attended by default. To test this, we axiomatize a "constant-sensitivity"...

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Published inManagement science Vol. 53; no. 9; pp. 1423 - 1438
Main Authors Ebert, Jane E. J, Prelec, Drazen
Format Journal Article
LanguageEnglish
Published Linthicum, MD INFORMS 01.09.2007
Institute for Operations Research and the Management Sciences
SeriesManagement Science
Subjects
Analysis
Analytical forecasting
Applied sciences
Control groups
Decision making
Decision theory. Utility theory
Discount rates
Discounting
Exact sciences and technology
Experiments
Future
Heuristics
hyperbolic discounting
intertemporal choice
Management science
Normativity
Operational research and scientific management
Operational research. Management science
Restaurants
Sensitivity analysis
Studies
Temporal dimensions
temporal discounting
Time pressure
Valuation
Value (Economics)
temporal discounting
Rebate
Discount
Instruction
hyperbolic discounting
Intertemporal choice
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Summary:We propose that the temporal dimension is fragile in that choices are insufficiently sensitive to it, and second, such sensitivity as exists is exceptionally malleable, unlike other dimensions such as money, which are attended by default. To test this, we axiomatize a "constant-sensitivity" discount function, and in four studies, we show that the degree of time-sensitivity is inadequate relative to the compound discounting norm, and strongly susceptible to manipulation. Time-sensitivity is increased by a comparative within-subject presentation (Experiment 1), direct instruction (Experiment 3), and provision of a visual cue for time duration (Experiment 4); time-sensitivity is decreased using a time pressure manipulation (Experiment 2). In each study, the sensitivity manipulation has an opposite effect on near-future and far-future valuations: Increased sensitivity decreases discounting in the near future and increases discounting in the far future. In contrast, such sensitivity manipulations have little effect on the money dimension.
Bibliography:SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 14
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.1060.0671