Working Paper: NBER ID: w14353
Authors: Christopher F. Chabris; David Laibson; Carrie L. Morris; Jonathon P. Schuldt; Dmitry Taubinsky
Abstract: We use two different approaches to measure intertemporal preferences. First we employ the classical method of inferring preferences from a series of choices (subjects choose between $X now or $Y in D days). Second we adopt the novel approach of inferring preferences using only response time data from the same choices (how long it takes subjects to choose between $X now or $Y in D days). In principle, the inference from response times should work, since choices between items of nearly equivalent value should take longer than choices between items with substantially different values. We find that choice-based analysis and response-time-based analysis yield nearly identical discount rate estimates. We conclude that response time data sheds light on both our revealed (choice-based) preferences and on the cognitive processes that implement those preferences.
Keywords: intertemporal preferences; response times; economic decision-making
JEL Codes: C0; D01; D87
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decision difficulty (response time) (D91) | inferred preferences for immediate versus delayed rewards (D15) |
| longer response times (C41) | choices made between nearly equivalent rewards (D87) |
| response time data (Y10) | predict subsequent choice behavior (D87) |
| discount rates inferred from response times (E43) | discount rates derived from traditional choice-based methods (H43) |