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

Department of Marketing and Logistics, Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142
jebert{at}csom.umn.edu
dprelec{at}mit.edu

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.

Key Words: temporal discounting; hyperbolic discounting; intertemporal choice
History: Received: August 27, 2004;