Descriptive Models of Intertemporal Choice Part 2: The Delay-Speedup Asymmetry and Other Anomalies

Abstract

The delay-speedup asymmetry is that a positive outcome is discounted more, and a negative outcome is discounted less, when it is delayed than when it is “sped up” over the same interval. To account for this asymmetry, Loewenstein and Prelec’s (1992) hyperbolic discounting model and Scholten and Read’s (2010) tradeoff model invoke reference dependence along the money attribute in combination with aversion to money lost (i.e., ‘loss aversion’). We apply parametric specifications of these models to indifference data from three matching studies and preference from a fourth choice study. We compare their predictive accuracy with that of an alternative formulation of the tradeoff model, in which the delay-speedup asymmetry arises from reference dependence along the time attribute in combination with hypersensitivity to time lost and hyposensitivity to time gained. A parametric specification of this model outperformed those of the two competing models. We discuss theoretical and methodological issues in the empirical modeling of data containing the delay-speedup asymmetry.