Longitudinal Time Inconsistency

The hyperbolic discounting model predicts that preferences will often switch from a larger-later outcome (LL) to a smaller-sooner one (SS) as the two options move closer in time. However, remarkably few studies have been designed to test this prediction. In three studies using a theoretically appropriate longitudinal design, we examined the relative prevalence of different preference reversals. Across three experiments, we vary the time until SS (Amazon gift certificates) and find that the preponderance of preference reversals are consistent with the hyperbolic model only when the sooner outcome is immediate (less than one hour away), supporting a quasi-hyperbolic functional form.


Daniel Read and Shane Frederick (2007) ,"Longitudinal Time Inconsistency", in NA - Advances in Consumer Research Volume 34, eds. Gavan Fitzsimons and Vicki Morwitz, Duluth, MN : Association for Consumer Research, Pages: 654-660.


Daniel Read, University of Durham, UK
Shane Frederick, Massachusetts Institute of Technology, USA


NA - Advances in Consumer Research Volume 34 | 2007

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