Preference Reversals Due to Myopic Discounting of Delayed Reward
Abstract
A basic stationarity axiom of economic theory assumes stable preference between two deferred goods separated by a fixed time To test this assumption, we offered subjects choices between delayed rewards, while manipulating the delays to those rewards Preferences typically reversed with changes in delay, as predicted by hyperbolic discounting models of impulsiveness Of 36 subjects, 34 reversed preference from a larger, later reward to a smaller, earlier reward as the delays to both rewards decreased We conclude that the stationarity axiom is not appropriate in models of human choice
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Hyperbolic discounting helps explain violations of the stationarity axiom: preference for larger-later rewards when smaller-sooner rewards are unavailable reverses when the smaller-sooner reward is immediately accessible.
“The hyperbolic shape of the discounting function also helps to explain the previously mentioned violations of the stationarity axiom in economics (Strotz, 1955); i.e., the tendency to prefer LLRs when SSRs are not readily available, and to reverse this preference when the SSR is immediately accessible.”
From Changing Delay Discounting and Impulsive Choice: Implications for Addictions, Prevention, and Human Health (2019) · cites this paper as Kirby & Herrnstein, 1995
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Ericson, K. M., & Laibson, D. (2019) · Handbook of Behavioral Economics: Applications and Foundations 1 · doi:10.1016/bs.hesbe.2018.12.001 · Cited by 125 · see citing works
Discount Rates for Time versus Dates: The Sensitivity of Discounting to Time-Interval Description
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The Role of Tenure Security and Private Time Preference in Neotropical Deforestation
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Sripada, C., Gonzalez, R., Phan, K. L., & Liberzon, I. (2010) · Human Brain Mapping · doi:10.1002/hbm.21136 · Cited by 123 · see citing works
The behavioral economics of will in recovery from addiction
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Value for the future and preventive health behavior.
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Intertemporal Tradeoffs for Gains and Losses: An Experimental Measurement of Discounted Utility
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Making choices in anticipation of similar future choices can increase self-control.
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Self-citationRethinking Decision Usefulness
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DELAYED REWARD AND COST DISCOUNTING
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Highbrow Films Gather Dust: Time-Inconsistent Preferences and Online DVD Rentals
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PROBABILITY DISCOUNTING OF GAINS AND LOSSES: IMPLICATIONS FOR RISK ATTITUDES AND IMPULSIVITY
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- Authors
- Kirby, K. N., & Herrnstein, R. J.
- Affiliations
- Williams College (US)
- Harvard University (US)
- Corresponding author
- Kirby, Kris N.
- Venue
- Psychological Science
- Publisher
- SAGE Publications
- Published
- 1995-03
- Volume
- 6
- Issue
- 2
- Pages
- 83-89
- ISSN
- 0956-7976 (ISSN-L)
- 1467-9280
- OpenAlex
- W2135574561
- Cited by
- 591
- References
- 32
- Citations by year
- 2026: 11 · 2025: 30 · 2024: 5 · 2023: 14 · 2022: 21 · 2021: 17 · 2020: 21 · 2019: 24 · 2018: 28 · 2017: 21 · 2016: 23 · 2015: 23 · 2014: 26 · 2013: 34 · 2012: 26
- FWCI
- 6.46
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Psychological Science (publishedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Safety Research › Experimental Behavioral Economics Studies
- Life Sciences › Neuroscience › Cognitive Neuroscience › Neural and Behavioral Psychology Studies
- Keywords
- preference reversal, hyperbolic discounting, delayed rewards, impulsivity, time preference, intertemporal choice, delay sensitivity
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