Temporal Discounting of Gains and Losses of Time: An Experimental Investigation

Abstract

This paper investigates “asymmetries” between non-monetary gains and losses in inter-temporal choice. We considered gains and losses of spare/working time with respect to a reference duration defined in a working contract. Specifically, we elicited a behavioral model of inter-temporal choice that accounts for a gain/loss-dependent discounting function and a reference-dependent utility. Additionally, we did not impose preference for the present (positive discounting) and allowed for both decreasing and increasing impatience. While our results are standard regarding the discount of money (our baseline treatment), our subjects heavily discounted gains of time. More patience was observed for losses of time and a sizable portion of subjects even exhibited negative discounting, i.e. prefer to expedite losses of time. Our econometric estimations also reveal a much larger heterogeneity of behavior in terms of both utility and discounting for gains and losses of spare time as compared to money.

Keywords: Heterogenous intertemporal preferences, Discounted utility, Gain-loss asymmetry, Negative discounting, Reference point, Dynamic consistency