Abstract
Two experiments were performed to test a psychophysical account of parallels between biases in risky choice and intertemporal choice. Experiment 1 demonstrated the common difference effect in intertemporal choice and the common ratio effect in risky choice. As was predicted, these two biases were uncorrelated with each other, although each was correlated across monetary/health domains. This result is consistent with the supposition that these two biases result from psychophysical properties of two different dimensions (time and probability, respectively). Experiment 2 examined the magnitude effect in intertemporal choice and the peanuts effect in risky choice. These two biases were correlated with each other but were uncorrelated across monetary/health domains. This result is consistent with the supposition that these two biases result from psychophysical properties of the same dimension (utility of money or health).
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Ahlbrecht, M., &Weber, M. (1997). An empirical study on intertemporal decision making under risk.Management Science,43, 813–826.
Ainslie, G. (1975). Specious reward: A behavior theory of impulsiveness and impulse control.Psychological Bulletin,82, 463–509.
Bell, D. E. (1985). Disappointment in decision making under uncertainty.Operations Research,33, 1–27.
Benzion, U., Rapoport, A., &Yagil, J. (1989). Discount rates inferred from decisions: An experimental study.Management Science,35, 270–284.
Bleichrodt, H., &Johannesson, M. (2001). Time preference for health: A test of stationarity versus decreasing timing aversion.Journal of Mathematical Psychology,45, 265–282.
Bostic, R., Herrnstein, R. J., &Luce, R. D. (1990). The effect on the preference-reversal phenomenon of using choice indifference.Journal of Economic Behavior & Organization,13, 193–212.
Cairns, J. A. (1994). Valuing future benefits.Health Economics,3, 221–229.
Chapman, G. B. (1996). Temporal discounting and utility for health and money.Journal of Experimental Psychology: Learning, Memory, & Cognition,22, 771–791.
Chapman, G. B. (1997). Risk attitude and time preferences.Medical Decision Making,17, 355–356.
Chapman, G. B. (1998). Sooner or later: The psychology of intertemporal choice. In D. L. Medin (Ed.),The psychology of learning and motivation (Vol. 38, pp. 83–113). New York: Academic Press.
Chapman, G. B., &Elstein, A. S. (1995). Valuing the future: Temporal discounting of health and money.Medical Decision Making,15, 373–386.
Chapman, G. B., &Winquist, J. R. (1998). The magnitude effect: Temporal discount rates and restaurant tips.Psychonomic Bulletin & Review,5, 119–123.
Christensen-Szalanski, J. J. J. (1984). Discount functions and the measurement of patients’ values: Women’s decisions during childbirth.Medical Decision Making,4, 47–58.
Du, W., Green, L., &Myerson, J. (2002). Cross-cultural comparisons of discounting delayed and probabilistic rewards.Psychological Record,52, 479–492.
Frederick, S., Loewenstein, G., &O’Donoghue, T. (2003). Time discounting and time preference: A critical review. In G. Loewenstein, D. Read, & R. F. Baumeister (Eds.),Time and decision: Economic and psychological perspectives on intertemporal choice (pp. 13–86). New York: Russell Sage Foundation.
Gafni, A., &Torrance, G. W. (1984). Risk attitude and time preference in health.Management Science,30, 440–451.
Green, L., Fristoe, N., &Myerson, J. (1994). Temporal discounting and preference reversals in choice between delayed outcomes.Psychonomic Bulletin & Review,1, 383–389.
Green, L., &Myerson, J. (2004). A discounting framework for choice with delayed and probabilistic rewards.Psychological Bulletin,130, 769–792.
Green, L., Myerson, J., &McFadden, E. (1997). Rate of temporal discounting decreases with amount of reward.Memory & Cognition,25, 715–723.
Green, L., Myerson, J., &Ostaszewski, P. (1999). Amount of reward has opposite effects on the discounting of delayed and probabilistic outcomes.Journal of Experimental Psychology: Learning, Memory, & Cognition,25, 418–427.
Holt, D. D., Green, L., &Myerson, J. (2003). Is discounting impulsive? Evidence from temporal and probability discounting in gambling and non-gambling college students.Behavioural Processes,64, 355–367.
Kahneman, D., &Tversky, A. (1979). Prospect theory: An analysis of decision under risk.Econometrica,47, 263–291.
Kahneman, D., &Tversky, A. (1984). Choices, values, and frames.American Psychologist,39, 341–350.
Keren, G., &Roelofsma, P. (1995). Immediacy and certainty in intertemporal choice.Organizational Behavior & Human Decision Processes,63, 287–297.
Kirby, K. N., &Herrnstein, R. J. (1995). Preference reversals due to myopic discounting of delayed reward.Psychological Science,6, 83–89.
Kirby, K. N., &MarakoviĆ, N. N. (1995). Modeling myopic decisions: Evidence for hyperbolic delay-discounting within subjects and amounts.Organizational Behavior & Human Decision Processes,64, 22–30.
Kirby, K. N., &Maraković, N. N. (1996). Delay-discounting probabilistic rewards: Rates decrease as amounts increase.Psychonomic Bulletin & Review,3, 100–104.
Koopsman, T. (1960). Stationary ordinal utility and impatience.Econometrica,19, 207–309.
Loewenstein, G., &Prelec, D. (1992). Anomalies in intertemporal choice: Evidence and interpretation.Quarterly Journal of Economics,107, 573–597.
Markowitz, H. (1952). The utility of wealth.Journal of Political Economy,60, 151–158.
Myerson, J., Green, L., Hanson, J. S., Holt, D. D., &Estle, S. J. (2003). Discounting delayed and probabilistic rewards: Processes and traits.Journal of Economic Psychology,24, 619–635.
Neumann, J. von, &Morgenstern, O. (1953).Theory of games and economic behavior. Princeton, NJ: Princeton University Press.
Prelec, D., &Loewenstein, L. (1991). Decision making over time and under uncertainty: A common approach.Management Science,37, 770–786.
Rachlin, H., Brown, J., &Cross, J. (2000). Discounting in judgments of delay and probability.Journal of Behavioral Decision Making,13, 145–159.
Rachlin, H., Logue, A. W., Gibbon, J., &Frankel, M. (1986). Cognition and behavior in studies of choice.Psychological Review,93, 33–45.
Rachlin, H., Raineri, A., &Cross, D. (1991). Subjective probability and delay.Journal of the Experimental Analysis of Behavior,55, 233–244.
Rachlin, J., Siegel, E., &Cross, D. (1994). Lotteries and time horizon.Psychological Science,5, 390–393.
Redelmeier, D. A., &Heller, D. N. (1993). Time preferences in medical decision making and cost-effectiveness analysis.Medical Decision Making,13, 212–217.
Richards, J. B., Zhang, L., Mitchell, S. H., &de Wit, H. (1999). Delay or probability discounting in a model of impulsive behavior: Effect of alcohol.Journal of the Experimental Analysis of Behavior,71, 121–143.
Thaler, R. H. (1981). Some empirical evidence on dynamic inconsistency.Economic Letters,8, 201–207.
Tversky, A., &Kahneman, D. (1992). Advances in prospect theory: Cumulative representations of uncertainty.Journal of Risk & Uncertainty,5, 297–323.
Tversky, A., Sattath, S., &Slovic, P. (1988). Contingent weighting in judgment and choice.Psychological Review,95, 371–384.
Weber, B. J., &Chapman, G. B. (2005). Playing for peanuts: Why is risk seeking more common for low-stakes gambles?Organizational Behavior & Human Decision Processes,97, 31–46.
Author information
Authors and Affiliations
Corresponding authors
Additional information
This project was supported by NSF Grants SES-99-75083 and SES-03-25080 to the first author and by a Rutgers University excellence fellowship and an NSF graduate fellowship awarded to the second author.
Note—This article was accepted by the previous editorial team, when Colin M. MacLeod was Editor
Rights and permissions
About this article
Cite this article
Chapman, G.B., Weber, B.J. Decision biases in intertemporal choice and choice under uncertainty: Testing a common account. Memory & Cognition 34, 589–602 (2006). https://doi.org/10.3758/BF03193582
Received:
Accepted:
Issue Date:
DOI: https://doi.org/10.3758/BF03193582