The impact of temporal context and risk on the judged value of future outcomes

Abstract

This study investigated (1) the impact of time frames on the subjective values of time or the discounting function, the discounting operation, and the response strategy used in two tasks, (2) scale convergence across risky and riskless investments for time and the value of outcomes, (3) the effect of continuous and categorical response formats on the subjects' judgments, and (4) the comparability of the discounting strategy used in rating and preference tasks. College students were asked to evaluate the desirability of risky investments that were presented in the context of a short time frame or a long time frame. All of the subjects judged risky investments during one session and indicated their strength of preference for riskless investments during the other session. Results indicated that the time frame manipulation affected the form of the discounting function. Although scale convergence was obtained for the interest rates across tasks, scale convergence did not occur for time. The subjective values for time, generated from the riskless investments, consistently exceeded the scale values obtained with the risky investments. The discounting functions for time were much steeper for the riskless investments than for the risky investments. For example, a $300 return from a riskless investment was discounted more, as a function of the time, than was a $300 return associated with risk. These results are discussed in relation to previous research and the implications for a general model of temporal discounting.