Patience Auctions: Novel Mechanisms For Eliciting Discount Rates and the Impact of Time Vs. Money Framing

Christopher Olivola, Princeton University, USA
Stephanie Wang, Princeton University, USA
We introduce, test, and compare two novel auction-based experimental methods for eliciting discount rates. In these “patience auctions”, participants bid the smallest sum they would prefer receiving in the future -or- the longest time they would prefer waiting for a reward, rather than receive a smaller, immediate payoff. The winning bidder receives the delayed reward; all other bidders receive the smaller, immediate payoff. These auctions offer a few important advantages over other methods of elicitation. In addition, we compare how discount rates vary depending on whether the auction focuses participants’ attention on the temporal or monetary dimension of delayed rewards.
[ to cite ]:
Christopher Olivola and Stephanie Wang (2009) ,"Patience Auctions: Novel Mechanisms For Eliciting Discount Rates and the Impact of Time Vs. Money Framing", in NA - Advances in Consumer Research Volume 36, eds. Ann L. McGill and Sharon Shavitt, Duluth, MN : Association for Consumer Research, Pages: 139-142.