How time flies!

57 Pages Posted: 10 Dec 2018 Last revised: 23 Sep 2021

See all articles by Xiu Chen

Xiu Chen

Southern University of Science and Technology

Xiaojian Zhao

Monash University - Department of Economics

Date Written: September 22, 2021

Abstract

The paper identifies a potential gap between intertemporal choices and time preference: The elicited intertemporal decisions could be partly driven by a biased perception of time and thus may not completely reveal the actual time preference. To test this, we explore the causal relationship between time perception and intertemporal choices by conducting a laboratory experiment, in which cognitive load is used as a stimulating instrument to induce differences in time perception. We establish that the perceived time lengths for subjects with high cognitive load are shorter than those with low cognitive load and that individuals who underestimate time appear more patient in their intertemporal decisions. The mediation analyses show that time perception mediates a significant part of the cognitive load’s effect on intertemporal choices. Our study thus demonstrates that the time preference identified by intertemporal choices might be confounded by the potentially biased perception of how time flies.

Keywords: time perception, intertemporal choice, time preference, cognitive load

JEL Classification: C91, D91

Suggested Citation

Chen, Xiu and Zhao, Xiaojian, How time flies! (September 22, 2021). Available at SSRN: https://ssrn.com/abstract=3285834 or http://dx.doi.org/10.2139/ssrn.3285834

Xiu Chen (Contact Author)

Southern University of Science and Technology ( email )

Shenzhen, 518000

Xiaojian Zhao

Monash University - Department of Economics ( email )

Australia

HOME PAGE: http://https://sites.google.com/site/xjzhao81/

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