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Looking Ahead: Subjective Time Perception and Individual Time Discounting

Author

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  • W. David Bradford
  • Paul Dolan
  • Matteo M. Galizzi

Abstract

Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioural parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people's perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest "hyperbolic" discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioural parameter s using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception.

Suggested Citation

  • W. David Bradford & Paul Dolan & Matteo M. Galizzi, 2014. "Looking Ahead: Subjective Time Perception and Individual Time Discounting," CEP Discussion Papers dp1255, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1255
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    File URL: http://cep.lse.ac.uk/pubs/download/dp1255.pdf
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    References listed on IDEAS

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    1. Guy Michaels & Ferdinand Rauch, 2018. "Resetting the Urban Network: 117–2012," Economic Journal, Royal Economic Society, vol. 128(608), pages 378-412.
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    Cited by:

    1. L. Corazzini & A. Filippin & P. Vanin, 2014. "Economic Behavior under Alcohol Influence: An Experiment on Time, Risk, and Social Preferences," Working Papers wp944, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Lemoine, Derek, 2018. "Age-induced acceleration of time: Implications for intertemporal choice," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 143-152.

    More about this item

    Keywords

    Time preferences; Time perception; Hyperbolic discounting;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D10 - Microeconomics - - Household Behavior - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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