Impatient to Receive or Impatient to Achieve: How Goal Gradients and Time Discounting Jointly Determine Intertemporal Choice

Abstract

Time discounting suggests that people devalue future outcomes, such that they value the objectively same amount of benefit more if it occurs sooner, rather than later in time. However, receiving future benefits is often the outcome of achieving specific goals. Until such goals have been completed, people face uncertainty as to whether they will attain the reward or how much reward they will receive. Prior research has documented the goal gradient—stronger motivation to complete a goal when goal completion is more proximate. Much of the research in the separate literatures on time discounting and goal gradient effects potentially confound the two. The current research disassociates the effects of goal gradient and time discounting on intertemporal choices, by experimentally separating the timing of goal completion and the timing of receiving a reward. People’s decisions are sensitive to both the timing of both goal completion and, separately, of receiving financial rewards. We propose improved models of intertemporal choice and demonstrate the difference when estimating discount factors.

Keywords: time discounting, intertemporal decisions, present bias, goal gradient, goal completion, uncertainty