An Investigation of Time Inconsistency
Preference between two future outcomes may change over time--a phenomenon labeled as time inconsistency. The term "time inconsistency" is usually used to refer to cases in which a larger-later outcome is preferred over a smaller-sooner one when both are delayed by some time, but then with the passage of time a preference switches to the smaller-sooner outcome. The current paper presents four empirical studies showing that time inconsistency in the other direction is also possible: A person may prefer the smaller-sooner outcome when both options are in the future, but decide to wait for the larger-later one when the smaller option becomes immediately available. We find that such "reverse time inconsistency" is more likely to be observed when the delays to and between the two outcomes are short (up to a week). We propose that reverse time inconsistency may be associated with a reversed-S shape discount function, and provide evidence that such a discount function captures part of the variation in intertemporal preferences.
Volume (Year): 55 (2009)
Issue (Month): 3 (March)
|Contact details of provider:|| Postal: |
Web page: http://www.informs.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:55:y:2009:i:3:p:470-482. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If references are entirely missing, you can add them using this form.