Read, Daniel, Frederick, Shane and Scholten, Marc (2013) DRIFT : an analysis of outcome framing in intertemporal choice. Journal of Experimental Psychology: Learning, Memory, and Cognition, Volume 39 (Number 2). pp. 573-588. doi:10.1037/a0029177 ISSN 0278-7393.

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Abstract

People prefer to receive good outcomes immediately rather than wait, and they must be compensated for waiting. But what influences their decision about how much compensation is required for a given wait? To give a partial answer to this question, we develop the DRIFT model, a heuristic description of how framing influences intertemporal choice. We describe 4 experiments showing the implications of this model. In the experiments, we vary how the difference between a smaller sooner outcome and a larger later outcome is framed-either as total interest earned, as an interest rate, or as total amount earned (the conventional frame in studies of intertemporal choice)-and whether the larger later outcome is described as resulting from the investment of the smaller sooner one. These alternate frames have several effects. First, the investment language increases patience. Second, the explicit provision of the (otherwise implicit) experimental interest rate sharply reduces the magnitude effect. Correspondingly, we find that interest frames increase patience when the rewards are small, but they decrease patience when they are large. Third, the interest-rate frame induces somewhat greater discounting for longer time periods and, thus, reverses the common finding of "hyperbolic" discounting. Thus, many of the "stylized facts" implied by studies involving choices between a smaller sooner and a larger later amount are eliminated or reverse under alternate outcome frames.

Item Type:	Journal Article
Divisions:	Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Journal of Experimental Psychology: Learning, Memory, and Cognition
Publisher:	American Psychological Association
ISSN:	0278-7393
Official Date:	March 2013
Dates:	Date Event March 2013 Published
Volume:	Volume 39
Number:	Number 2
Page Range:	pp. 573-588
DOI:	10.1037/a0029177
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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