Psychological time and intertemporal preference

Abstract

Many decisions people make involve intertemporal tradeoffs between current and future costs and benefits. Because outcomes in such decisions are separated by time (i.e., delay), the perception of time should play an important role. Traditionally, researchers have treated time as objective information (i.e., calendar time) and examined the effect of different delays on intertemporal preference. Recently, researchers have started to take into account the subjective nature of future time perception and to use psychological (subjective) time rather than objective calendar time as a focal explanatory variable for intertemporal preference. The subjective nature of future time perception and its impact on intertemporal preference has particular significance because it implies that one's impatience can be reduced by altering his or her time perception.