Introducing money at any time can reduce discounting in intertemporal choices with rewards: An extension of the upfront money effect

Abstract

To study intertemporal choices, researchers typically instruct subjects to choose between smaller and sooner (SS) and larger and later (LL) rewards (e.g., gaining CNY 210 in a week vs. gaining CNY 250 in five weeks). People generally tend to discount steeply and prefer SS to LL rewards in such situations. Jiang, Hu and Zhu (2014) recently showed that adding upfront losses or gains to both SS and LL rewards can reduce people’s discounting, and they provided several possible accounts for this effect, including the salience account and the time scale hypothesis. In the current paper, based on the upfront money effect found in Jiang et al. (2014), we further showed that the effect of discounting decreasing could be extended to adding dated-money between SS and LL rewards and after LL rewards. The results helped us exclude both the time scale hypothesis and another possible explanation: preference for improvement. We hypothesized that all the current findings (recorded in this paper and in Jiang et al.) could be accommodated well using the salience account.

Better is worse, worse is better: Reexamination of violations of dominance in intertemporal choice

“…Earlier, in the introduction, we suggested that the salience account may explain Scholten and Read's violations of dominance, which was one of the reasons that we designed the current study. Although the results reported here are consistent with the salience account's predictions that extra-dated money makes the money dimension more salient and more heavily weighted, thus reducing intertemporal discounting (Jiang et al, 2014;Sun & Jiang, 2015), we did not examine this account directly. The main purpose of this paper was to extend Scholten and Read's violations and to provide possible evidence against the explanation of a preference for improvement.…”

“…Bateman et al proposed that in the second game, comparison with the small loss makes $9 more valued, thus increasing the gamble's attractiveness. However, the utility changing hypothesis is confined to the findings reported here and cannot accommodate the findings of Jiang et al (2014), Sun and Jiang (2015) and , because some of the extra-dated money introduced in their studies is rather large; for example, a common "Gain CNY 4250 now" was added to both of the pairwise options of "Gain CNY 4800 in a year" and "Gain CNY 8000 in 4 years" (in Experiment 1A, Jiang et al, 2014).…”

“…The order of options L and M was counterbalanced among students. In other words, approximately half of the students were offered the choice with the L option presented first (95.5% chose M), whereas the other The other source of doubt arises from our own recent research (Jiang, Hu & Zhu, 2014;Jiang, Sun, Zheng, Wang & Qin, 2016;Sun & Jiang, 2015). We found some effects in intertemporal choice that might be related to the violations in Scholten and Read (2014).…”

“…Moreover, we found that, regardless of whether the extra dated-money was a loss or a gain, inserted before the SS option, inserted between the SS and LL options, or inserted later than the LL options, its introduction reduced intertemporal discounting (Sun & Jiang, 2015). And, the extra dated-money effect can also be extended to intertemporal choice when the focal intertemporal options are losses .…”

Comparing mixed intertemporal tradeoffs with pure gains or pure losses

“…However, when choosing between prospects involving sequences, people may be more focused on outcomes than on delays because, in sequences, outcomes are more salient than delays. Thus, choices involving sequences often show lower discounting rates than choices between single-dated outcomes (Jiang et al, 2017;Jiang et al, 2016;Jiang et al, 2014;Sun & Jiang, 2015). In the mixed tasks, prospects can be seen as sequences.…”