Discounting and Impatience

TL;DR

This paper introduces new discount functions that incorporate both time delay and time perception, providing a formal framework to better understand individual intertemporal preferences and their relation to personality traits.

Contribution

It develops a family of new discount functions with formal axiomatization, extending existing models to include time distortion effects in intertemporal decision making.

Findings

Smoking habit correlates with impatience and altered time perception.

Personality traits like conscientiousness, agreeableness, and openness relate positively to patience.

The models offer a practical framework for analyzing individual time preferences.

Abstract

Understanding how people actually trade off time for money is perhaps the major question in the field of time discounting. There is indeed a vast body of work devoted to explore the underlying mechanisms of the individual decision making process in an intertemporal context. This paper presents a family of new discount functions whereof we derive a formal axiomatization. Applying the framework proposed by Bleichrodt, Rohde and Wakker, we further extend their formulation of CADI and CRDI functions, making discounting a function not only of time delay but, simultaneously, also of time distortion. Our main purpose is, in practice, to provide a tractable setting within which individual intertemporal preferences can be outlined. Furthermore, we apply our models to study the relation between individual time preferences and personality traits. For the CADI-CADI, results show that the habit of smoking is heavily related with both impatience and time perception. Within the Big-Five framework, conscientiousness, agreeableness and openness are positively related with patience (low r, initial discount rate).