Does time inconsistency differ between gain and loss? An intra-personal comparison using a non-parametric elicitation method (A revised version)

Several studies in the time preference literature have found time inconsistency (TI) of both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates TI forgain outcomes do so for loss as well? This paper reports the individual's TI for both gain and loss in a laboratory setting. To compare individuals' TI for gain and loss precisely, we allowed the experiment to test for so-called future bias, which has been a focus area in recent TI literature. Further, we measured the level of TI rather than only identifying whether TI was present. We used a non-parametric elicitation method to avoid any specification error in the analysis. Based on this setting, we could examine the intra-personal relationship of TI for gain and loss–whether the same person shows similar TI of gain preference and TI of loss preference. Our findings are as follows: First, we found future bias in preference for not only gain but also loss, and confirmed that this tendency was consistent with previous findings on preference for gain. Second, such TI tended to have a positive relationship at the individual level for both gain and loss. Participants who exhibited TI when they chose gain tended to exhibit similar TI when they chose loss. These results suggest that people's perception of time is important in time preference; how far they perceive the future in their mind may play a crucial role in TI.