Experience and intertemporal choice

People need to make decisions over time (intertemporal choice) such as choosing some money now vs more money later or investing time in studying now vs enjoying leisure later. Two factors that can influence these decisions are people’s past experiences and feedback they have received on past decisions. However, these two factors are often overlooked when it comes to formally studying decision making, particularly when it comes to decisions over time. This thesis investigates both factors via novel intertemporal choice from experience experiments as well as a randomised control trial testing the effects of different forms of feedback. The first chapter gives an overview of intertemporal choice and decisions from experience. It begins by discussing what an intertemporal choice is — trading off something now for something later (and vice versa) — and how intertemporal choices are presented in lab experiments as primarily paper-based decisions, particularly when it comes to experiencing delays. Next, an overview of the intertemporal choice models and their assumptions and how these models evolved to capture behaviour is provided. Classical intertemporal choice effects are then presented and discussed. Afterwards, the literature on decisions under risk is introduced, focussing on the decisions from experience paradigm and the description-experience gap. One of the main findings from the decisions from experience literature is that people’s decisions diverge depending whether they are using descriptive vs experiential information. This is often times referred to as the description-experience gap. The next section of Chapter 1 covers the various paradigms of intertemporal choice and how experience has been incorporated into the different paradigms to better understand intertemporal choices outside of paperbased decisions. The last section of Chapter 1 reviews experiments that are considered intertemporal choice from experience experiments that are most similar to the experiments conducted in this thesis. In Chapter 2, two novel intertemporal choice from experience experiments are presented. The vast majority of research on intertemporal choice conducted with 2 humans has been paper-based, that is, the delays and rewards associated with each alternative are explicitly written. Nor has the vast majority of past research systematically tested how intertemporal choice from experience might differ from intertemporal choice from description. These two studies investigated whether there is a description-experience gap in intertemporal choice. Secondly, they test whether an intertemporal choice effect, the common difference effect, appears in experience. Thirdly, the role of time perception, a potential mediator of the description experience gap in intertemporal choice, is investigated. Overall, the results from Experiment 1 suggested that there isn’t a description-experience gap in intertemporal choice because of the appearance of the common difference effect in both description and experience. However, in Experiment 2, using pairs of delays that were more similar, the common difference effect disappeared in experience. A key reason for the selective appearance of the common difference may be uncertainty around the delays, which is further explored in Chapter 3. In Chapter 3, the role of uncertainty in a potential description-experience gap in intertemporal choice is tested. Previous intertemporal choice from experience studies that incorporate uncertainty draw different conclusions as to whether there is a description-experience gap in intertemporal choice. The experiment in Chapter 3 attempts to clarify whether uncertainty may be a potential cause of a description experience gap in intertemporal choice. Moreover, whether uncertainty moderates the size of description-experience gap and the size of the common difference effect in description and experience is examined. Consistent with the previous experiments, we find a common difference effect. When uncertainty around the delays was increased the size of the common difference effect was somewhat diminished relative to when there was less uncertainty around the delays. In Chapter 4, a randomised control trial on social comparison-based feedback is presented. This randomised control trial provides a more ecological valid test of intertemporal choices than lab based studies. Previous randomised control trials have investigated the role of giving social comparison-based feedback; however, few studies have directly tested the effect of different types of rank-based feedback in non-traditional classroom settings. In this chapter, the influence of rank-based 3 feedback vs mean-based feedback vs absolute-based feedback on subsequent quiz scores is compared. Overall, different social comparison-based feedback had little effect on quiz scores. In the final chapter of the thesis, Chapter 5, the findings and contributions of the thesis are reviewed. The main contributions of this thesis show that intertemporal choice effects, specifically the common difference effect, can be replicated on the order of seconds and in experience. Furthermore, this thesis also shows some evidence for a description-experience gap in intertemporal choice and that the gap may be moderated by uncertainty around the delays when people make decisions from experience. Also, this thesis provides a novel paradigm to test whether intertemporal choices from description differ from intertemporal choices from experience. Moreover, this thesis provides a test of intertemporal choice from experience in the real world.