Inference and preference in intertemporal choice

Abstract

When choosing between immediate and future rewards, how do people deal with uncertainty about the value of the future outcome or the delay until its occurrence? Skylark et al. (2020) suggested that people employ a delay-reward heuristic: the inferred value of an ambiguous future reward is a function of the stated delay, and vice-versa. The present paper investigates the role of this heuristic in choice behaviour. In Studies 1a--2b, participants inferred the value of an ambiguous future reward or delay before the true value was revealed and a choice made. Preference for the future option was predicted by the discrepancy between the estimated and true values: the more pleasantly surprising the delayed option, the greater the willingness to choose it. Studies 3a--3c examined the association between inference and preference when the ambiguous values remained unknown. As predicted by the use of a delay-reward heuristic, inferred delays and rewards were positively related to stated rewards and delays, respectively. More importantly, choices were associated with inferred rewards and, in some circumstances, delays. Critically, estimates and choices were both order-dependent: when estimates preceded choices, estimates were more optimistic (people inferred smaller delays and larger rewards) and were subsequently more likely to choose the delayed option than when choices were made before estimates. These order effects argue against a simple model in which people deal with ambiguity by first estimating the unknown value and then using their estimate as the basis for decision. Rather, it seems that inferences are partly constructed from choices, and the role of inference in choice depends on whether an explicit estimate is made prior to choosing. Finally, we also find that inferences about ambiguous delays depend on whether the estimate has to be made in days or in a self-selected temporal unit, and replicate previous findings that older participants make more pessimistic inferences than younger ones. We discuss the implications and possible mechanisms for these findings.