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The surprisingly low motivational power of future rewards: Comparing conventional money-based measures of discounting with motivation-based measures

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  • Ebert, Jane E.J.
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    Abstract

    Temporal discount rates are often poor predictors of behaviors that we expect will be motivated by the future. The current research suggests this may be because conventional discounting measures are poor measures of the motivational value of future rewards. In six studies, I develop motivation-based measures of the present value (PV) of future rewards and compare the PVs obtained with those obtained using conventional money-based discounting measures. Conventional money-based PVs consistently overestimate motivation-based PVs and are discriminable from them. I explore explanations for this mismatch, including timing of effort exertion (Study 2) and loss aversion (Study 3), both features of the motivation-based measures. In Study 5, I use self-reports of valuation strategies and a time pressure manipulation to demonstrate that participants use different valuation strategies in the conventional money-based and the motivation-based measures that, in part, determine the difference in PVs obtained and the relatively low correspondence between them.

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    Bibliographic Info

    Article provided by Elsevier in its journal Organizational Behavior and Human Decision Processes.

    Volume (Year): 111 (2010)
    Issue (Month): 2 (March)
    Pages: 71-92

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    Handle: RePEc:eee:jobhdp:v:111:y:2010:i:2:p:71-92

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    Web page: http://www.elsevier.com/locate/obhdp

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    Keywords: Temporal discounting Future Present value Motivation Financial incentive Discount rate Measurement Valuation strategy Affect evaluation Affect heuristic;

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    1. Jane E. J. Ebert & Drazen Prelec, 2007. "The Fragility of Time: Time-Insensitivity and Valuation of the Near and Far Future," Management Science, INFORMS, vol. 53(9), pages 1423-1438, September.
    2. Liu, Wendy & Aaker, Jennifer, 2007. "Do you look to the future or focus on today? The impact of life experience on intertemporal decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 102(2), pages 212-225, March.
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    7. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
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    10. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
    11. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    12. Sultan, Fareena & Winer, Russell S., 1993. "Time preferences for products and attributes and the adoption of technologydriven consumer durable innovations," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 587-613, December.
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