A Discounting Framework for Choice With Delayed and Probabilistic Rewards.

When choosing between delayed or uncertain outcomes, individuals discount the value of such outcomes on the basis of the expected time to or the likelihood of their occurrence. In an integrative review of the expanding experimental literature on discounting, the authors show that although the same form of hyperbola-like function describes discounting of both delayed and probabilistic outcomes, a variety of recent findings are inconsistent with a single-process account. The authors also review studies that compare discounting in different populations and discuss the theoretical and practical implications of the findings. The present effort illustrates the value of studying choice involving both delayed and probabilistic outcomes within a general discounting framework that uses similar experimental procedures and a common analytical approach. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Discounting future green: Money versus the environment.

In 3 studies, participants made choices between hypothetical financial, environmental, and health gains and losses that took effect either immediately or with a delay of 1 or 10 years. In all 3 domains, choices indicated that gains were discounted more than losses. There were no significant differences in the discounting of monetary and environmental outcomes, but health gains were discounted more and health losses were discounted less than gains or losses in the other 2 domains. Correlations between implicit discount rates for these different choices suggest that discount rates are influenced more by the valence of outcomes (gains vs. losses) than by domain (money, environment, or health). Overall, results indicate that when controlling as many factors as possible, at short to medium delays, environmental outcomes are discounted in a similar way to financial outcomes, which is good news for researchers and policy makers alike. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Delay Discounting of Potentially Real and Hypothetical Rewards: II. Between- and Within-Subject Comparisons.

Prior studies comparing discounting of delayed hypothetical or potentially real rewards have reported no differences, but they used within-subjects designs. This raises the possibility that participants remembered their choices in one condition and repeated them in the other. In Experiment 1, between-subjects comparisons were made with an adjusting-amount procedure. No significant effect of reward type on delay discounting was detected. Experiment 2 increased the proportion of real rewards and made between- and within-subject comparisons. These comparisons also failed to reveal a significant effect of reward type. Although these findings are consistent with prior findings, caution is urged because choices involving hypothetical rewards have yet to be compared with choices involving real rewards (i.e., the consequences of every choice are obtained) in an experiment using forced-choice trials and steady-state methodology. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Discounting of past outcomes.

Drug use, abuse, and addiction are common behavioral manifestations of impulsiveness. A useful and popular laboratory analogue of impulsiveness is temporal discounting. Temporal discounting refers to the reduction in the present, subjective value of outcomes that are temporally distant in the future. The extensive literature on temporal discounting indicates hyperbolic discounting, the magnitude effect, and the sign effect. It is possible that the same principles may apply to other dimensions of psychological distance, including past temporal distance. The purpose of the present study was to examine the possibility that outcomes in the past are discounted hyperbolically and at a similar rate to outcomes in the future. The magnitude and sign effects were also examined in past discounting. Indifference points of college students were determined from a paper-and-pencil questionnaire of future and past discounting. The results demonstrate that humans discount temporally distant past outcomes similarly to future outcomes. Discounting of the future and past are qualitatively and quantitatively similar; discounting of past outcomes is orderly, hyperbolic, and consistent with most empirical observations from studies of future discounting, including the magnitude and sign effects. The present study indicates that the discounting of past outcomes is a quantifiable phenomenon, and the results are similar to observations from the established future-discounting literature. Past discounting may be of use in the study of drug-dependent and other impulsive populations. Implications of a relationship between future and past discounting are discussed. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Psychological connectedness and intertemporal choice.

People tend to attach less value to a good if they know a delay will occur before they obtain it. For example, people value receiving $100 tomorrow more than receiving $100 in 10 years. We explored one reason for this tendency (due to Parfit, 1984): In terms of psychological properties, such as beliefs, values, and goals, the decision maker is more closely linked to the person (his or her future self) receiving $100 tomorrow than to the person receiving $100 in 10 years. For this reason, he or she prefers his or her nearer self to have the $100 rather than his or her more remote self. Studies 1 and 2 showed that the greater the rated psychological connection between 2 parts of a participant’s life, the less he or she discounted future monetary and nonmonetary benefits (e.g., good days at work) over that interval. In Studies 3–5, participants read about characters who undergo large life-changing (and connectedness-weakening) events at different points in their lives and then made decisions about the timing of benefits on behalf of these characters. All 5 studies revealed a relation between perceived psychological connectedness and intertemporal choice: Participants preferred benefits to occur before large changes in connectedness but preferred costs to occur after these changes. (PsycINFO Database Record (c) 2011 APA, all rights reserved)     

Resource Slack and Propensity to Discount Delayed Investments of Time Versus Money.

The authors demonstrate that people discount delayed outcomes as a result of perceived changes over time in supplies of slack. Slack is the perceived surplus of a given resource available to complete a focal task. The present research shows that, in general, people expect slack for time to be greater in the future than in the present. Typically, this expectation of growth of slack in the future is more pronounced for time than for money. In 7 experiments, the authors demonstrate that systematic temporal shifts of perceived slack determine the extent and the pattern of delay discounting, including hyperbolic discounting. They use this framework to explain differential propensity to delay investments and receipts of time and money. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Functional neuroimaging of intertemporal choice models: A review.

People often forsake a larger reward later for a smaller reward sooner. The process of devaluing the larger, later prize is called temporal discounting or delay discounting, which lies at the core of intertemporal choice. Here, we describe the methodology and findings of research on the mechanisms of intertemporal choice, with a focus on those that utilize functional MRI (fMRI). We consider the neural bases for the most common economic models of intertemporal choice and examine whether these models require neural processes that are common or distinct across types of decision making. Considered as a whole, current research points to potentially distinct contributions from brain systems associated with valuation and with prospective thought, which may be reflected in separable foci in posterior cingulate cortex. Based on open questions in the field, we suggest two core goals for future research: identifying aspects of valuation that are unique to intertemporal choice and evaluating direct or indirect interactions between delay and prize magnitude. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Impulsive decision making and working memory.

Decision making that favors short-term over long-term consequences of action, defined as impulsive or temporally myopic, may be related to individual differences in the executive functions of working memory (WM). In the first 2 experiments, participants made delay discounting (DD) judgments under different WM load conditions. In a 3rd experiment, participants high or low on standardized measures of impulsiveness and dysexecutive function were asked to make DD judgments. A final experiment examined WM load effects on DD when monetary rewards were real rather than hypothetical. The results showed that higher WM load led to greater discounting of delayed monetary rewards. Further, a strong direct relation was found between measures of impulsiveness, dysexecutive function, and discounting of delayed rewards. Thus, limits on WM function, either intrinsic or extrinsic, are predictive of a more impulsive decision-making style. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Cocaine exposure causes long-term increases in impulsive choice.

In this study, the authors examined the long-term effects of prior exposure to cocaine on a delay-discounting task commonly used to measure impulsive choice. Male Long-Evans rats received daily intraperitoneal injections of 30 mg/kg cocaine HCl or saline for 14 days. Following 3 weeks of withdrawal, rats began training. On each trial, rats were given a choice between 2 levers. A press on 1 lever resulted in immediate delivery of a single 45-mg food pellet, and a press on the other resulted in delivery of 4 pellets after a delay period. Impulsive choice was defined as preference for the small immediate over the large delayed reward. Three months after treatment, cocaine-exposed rats displayed increased impulsive choice behavior. They also showed less anticipatory responding (entries into the food trough) during the delays prior to reward delivery, indicating that the enhanced impulsive choice in these rats may be related to deficits in bridging the delay between response and reward. These data demonstrate that cocaine exposure can cause enduring increases in impulsive choice behavior, consistent with observations in human subjects with drug addictions. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Confidence in Individual and Group Decision Making: When "Two Heads" Are Worse Than One.

The authors investigated students' accuracy and confidence judgments for course-related material in college classrooms. Under conditions of group work and instructor feedback, students produced higher exam accuracy scores working in groups than alone but at a cost of increased confidence for groups' wrong answers. Groups' high confidence for wrong answers generated the case when "two heads are worse than one." Students participating in groups that arrived at wrong exam answers gave higher confidence when wrong and lower confidence when correct for repeated items on a final exam. "Two heads" groups when wrong had no adverse effect on students' accuracy for repeated exam items. An intervention of lecture and readings on confidence calibration, metamemory, and overconfidence did not improve the students' accuracy-confidence judgments. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Differential effects on effort discounting induced by inactivations of the nucleus accumbens core or shell.

The authors investigated the contribution of the nucleus accumbens (NAc) core and shell to effort-based decision making using a discounting procedure. Selection of 1 lever delivered a smaller, 2-pellet reward immediately, whereas the other lever delivered a 4-pellet reward after a fixed ratio of presses (2, 5, 10, or 20) that increased over 4 blocks of 10 discrete choice trials. Subsequent testing employed an equivalent delays procedure, whereby the relative delay to reward delivery after selection of either option was equalized. In well-trained rats, inactivation of the core, but not the shell, via infusion of GABA A/B agonists muscimol/baclofen reduced preference for the high-effort option under standard conditions and also when rats were tested using an equivalent delays procedure. However, inactivation of the core did not alter preference for 4-pellet versus 2-pellet rewards when the relative costs of each option were the same (1 press). Thus, the NAc core, but not the shell, appears to be part of a neural circuit that biases choice toward larger rewards associated with a greater effort cost. Furthermore, the contributions by the NAc core to this form of decision making can be dissociated from its role in delay discounting. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Choice by value encoding and value construction: Processes of loss aversion.

Loss aversion and reference dependence are 2 keystones of behavioral theories of choice, but little is known about their underlying cognitive processes. We suggest an additional account for loss aversion that supplements the current account of the value encoding of attributes as gains or losses relative to a reference point, introducing a value construction account. Value construction suggests that loss aversion results from biased evaluations during information search and comparison processes. We develop hypotheses that identify the influence of both accounts and examine process-tracing data for evidence. Our data suggest that loss aversion is the result of the initial direct encoding of losses that leads to the subsequent process of directional comparisons distorting attribute valuations and the final choice. (PsycINFO Database Record (c) 2011 APA, all rights reserved)     

Affect regulation and temporal discounting: Interactions between primed, state, and trait affect.

Previous research has largely focused on the influence of experienced affect on decision making; however, other sources of affective information may also shape decisions. In two studies, we examine the interacting influences of affective information, state affect, and personality on temporal discounting rates (i.e., the tendency to choose small rewards today rather than larger rewards in the future). In Study 1, participants were primed with either positive or negative affect adjectives before making reward choices. In Study 2, participants underwent either a positive or negative affect induction before making reward choices. Results in both studies indicate that neuroticism interacts with state unpleasant affect and condition (i.e., positive or negative primes or induction) to predict discounting rates. Moreover, the nature of the interactions depends on the regulatory cues of the affective information available. These results suggest that irrelevant (i.e., primes) and stable (i.e., personality traits) sources of affective information also shape judgments and decision making. Thus, current affect levels are not the only source of affective information that guides individuals when making decisions. (PsycINFO Database Record (c) 2011 APA, all rights reserved)     

An empirical assessment of the form of utility functions.

Utility functions, which relate subjective value to physical attributes of experience, are fundamental to most decision theories. Seven experiments were conducted to test predictions of the most widely assumed mathematical forms of utility (power, log, and negative exponential), and a function proposed by Rachlin (1992). For pairs of gambles for real monetary gains, undergraduate and nonstudent subjects either reported an equalizing amount for 1 outcome that made the gambles subjectively equal or chose between gambles where the amounts were varied across trial, which allowed the equalizing amount to be estimated from their pattern of choices. Using a novel method that eliminates several limitations of previous research, I manipulated the outcomes across trials such that each type of utility function predicted a linear relationship between the equalizing amounts and the amounts of the other outcomes, and made point predictions for either the slope or intercept of that relationship. In a meta-analysis across experiments, systematic departures from the point predictions were observed for each type of utility function. Thus, the data imply that despite their historical importance and incorporation in many psychological and economic decision theories, the most widely assumed models of utility are incorrect. (PsycINFO Database Record (c) 2011 APA, all rights reserved)     

When success breeds failure: History, hysteresis, and delayed exit decisions.

The effects of feedback equivocality, information availability, and prior decision-making history on escalation and persistence were investigated. Replicating the findings of J.L. Bragger, D.H. Bragger, D.A. Hantula, and J.P. Kirnan (1998), this study found that participants receiving equivocal feedback on their decisions invested more money and invested across more opportunities; those who could purchase information invested fewer resources than did participants who did not have the opportunity to purchase information. There was an inverse linear relationship between the percentage of opportunities in which participants purchased information and the delay to exit decisions and total resources invested. Six weeks earlier, some participants took part in a more profitable investment scenario, and prior experience led to later increased investing when participants were faced with failure, even above that invested in a preceding, succeeding scenario. These results are consistent with an equivocality theory account of escalation. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

The cost of richness: The effect of the size and diversity of decision sets on post-decision regret.

Decision making is often made difficult by the knowledge that one has to live with the outcomes of one's choices and with the regret that these might engender. Formal theories propose that regret is proportional to the difference between the outcome of the option chosen and the expected outcome of the next best alternative that one may have chosen instead. It follows that the number of alternatives available for choice does not affect post-decisional regret. In this study, however, the authors proposed that regret is related to the comparison between the alternative chosen and the union of the positive attributes of the alternatives rejected. This general proposition yielded 2 hypotheses: (a) the larger number of alternatives from which one can choose and (b) the more diverse those alternatives are, the stronger the regret that an unsatisfactory choice would cause. These hypotheses were tested and supported by 4 experiments. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

The Hourglass Is Half Full or Half Empty: Temporal Framing and the Group Planning Fallacy.

Three studies tested hypotheses that temporal frames influence the group planning fallacy and are associated with subjective distance to deadlines and thoughts about successful task completion. Temporal framing effects occurred even though actual times to deadlines were held constant. In Study 1, groups predicted course project completion. Those adopting little time remaining frames exhibited less planning fallacy than those adopting lots of time remaining frames. Little time remaining frames were related to deadlines feeling closer and to fewer thoughts about success. Study 2 replicated this finding using a laboratory assembly task. Study 3 further indicated that it is whether thoughts about success come to mind easily, not thought content, that produces this effect; thoughts about success also led to deadlines feeling closer. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Temporal differences in trait self-ascription: When the self is seen as an other.

Seven studies exploring people's tendency to make observer-like attributions about their past and future selves are presented. Studies 1 and 2 showed temporal differences in trait assessments that paralleled the classic actor-observer difference. Study 3 provided evidence against a motivational account of these differences. Studies 4-7 explored underlying mechanisms involving differences in the focus of attention of the sort linked to the classic actor-observer difference. In Study 4, people perceived past and future selves from a more observer-like perspective than present selves. In Studies 5 and 6, manipulating attention to internal states (vs. observable behavior) of past and future selves led people to ascribe fewer traits to those selves. Study 7 showed an inverse relationship for past and present selves between observer-like visual focus and salience of internal information. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

How Subjective Grouping of Options Influences Choice and Allocation: Diversification Bias and the Phenomenon of Partition Dependence.

The authors argue that people's tendency to diversify their allocations of money and consumption choices over alternatives gives rise to decisions that vary systematically with the subjective grouping of available options. These subjective groupings are influenced by subtle variations in the presentation of options or elicitation of preferences. Studies 1-4 demonstrate such "partition dependence" in allocations of money to beneficiaries, consumption experiences to future time periods, and choices to a menu of consumption options. Study 5 documents weaker partition dependence among individuals with greater relevant experience discriminating among options, and Study 6 shows that the effect is attenuated among participants with stronger or more accessible intrinsic preferences. (PsycINFO Database Record (c) 2010 APA, all rights reserved)