Asymmetric discounting in intertemporal choice: a query-theory account

Towards a general model of temporal discounting

Psychological models of temporal discounting have now successfully displaced classical economic theory due to the simple fact that many common behavior patterns, such as impulsivity, were unexplainable with classic models. However, the now dominant hyperbolic model of discounting is itself becoming increasingly strained. Numerous factors have arisen that alter discount rates with no means to incorporate the different influences into standard hyperbolic models. Furthermore, disparate literatures are emerging that propose theoretical constructs that are seemingly independent of hyperbolic discounting. We argue that, although hyperbolic discounting provides an eminently useful quantitative measure of discounting, it fails as a descriptive psychological model of the cognitive processes that produce intertemporal preferences. Instead, we propose that recent contributions from cognitive neuroscience indicate a path for developing a general model of time discounting. New data suggest a means by which neuroscience-based theory may both integrate the diverse empirical data on time preferences and merge seemingly disparate theoretical models that impinge on time preferences.

The behavioral and neural effect of emotional primes on intertemporal decisions

Research on intertemporal behavior has emphasized trait-like variance. However, recent studies have begun to explore situational factors that affect intertemporal preference. In this study, we examined the associations between emotional primes and both behavior and brain function during intertemporal decision making. Twenty-two participants completed a dual task in which they were required to make intertemporal choices while holding an expressive face in memory. From trial-to-trial, the facial expression varied between three alternatives: (i) fearful, (ii) happy and (iii) neutral. Brain activity was recorded using functional magnetic resonance imaging for 16 participants. Behavioral data indicated that fearful (relative to happy) faces were associated with greater preference for larger but later rewards. During observation of fearful faces, greater signal change was observed in the right dorsolateral prefrontal cortex. During subsequent decision making, the fear prime was associated with greater signal increase in structures including the posterior sector of the anterior cingulate cortex. Individual differences in this activity correlated with the magnitude of the priming effect on behavior. These findings suggest that incidental emotions affect intertemporal choice. Increased farsightedness after the fear prime may be explained by an 'inhibition spillover' effect.

The financial costs of sadness

We hypothesized a phenomenon that we term myopic misery. According to our hypothesis, sadness increases impatience and creates a myopic focus on obtaining money immediately instead of later. This focus, in turn, increases intertemporal discount rates and thereby produces substantial financial costs. In three experiments, we randomly assigned participants to sad- and neutral-state conditions, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1 and 2. Sadness significantly increased impatience: Relative to median neutral-state participants, median sad-state participants accepted 13% to 34% less money immediately to avoid waiting 3 months for payment. In Experiment 2, impatient thoughts mediated the effects. Experiment 3 revealed that sadness made people more present biased (i.e., wanting something immediately), but not globally more impatient. Disgusted participants were not more impatient than neutral participants, and that lack of difference implies that the same financial effects do not arise from all negative emotions. These results show that myopic misery is a robust and potentially harmful phenomenon.

Preference by association: how memory mechanisms in the hippocampus bias decisions

Every day people make new choices between alternatives that they have never directly experienced. Yet, such decisions are often made rapidly and confidently. Here, we show that the hippocampus, traditionally known for its role in building long-term declarative memories, enables the spread of value across memories, thereby guiding decisions between new choice options. Using functional brain imaging in humans, we discovered that giving people monetary rewards led to activation of a preestablished network of memories, spreading the positive value of reward to nonrewarded items stored in memory. Later, people were biased to choose these nonrewarded items. This decision bias was predicted by activity in the hippocampus, reactivation of associated memories, and connectivity between memory and reward regions in the brain. These findings explain how choices among new alternatives emerge automatically from the associative mechanisms by which the brain builds memories. Further, our findings demonstrate a previously unknown role for the hippocampus in value-based decisions.

Training cognition in ADHD: current findings, borrowed concepts, and future directions

With both its high prevalence and myriad of negative outcomes, Attention-Deficit/Hyperactivity Disorder (ADHD) demands a careful consideration of the efficacy of its treatment options. Although the benefits of medication have a robust empirical background, nonpharmaceutical interventions evoke particular interest, as they are often viewed more favorably by parents. This review pays special attention to the use of working memory and recent cognitive training attempts in ADHD, describing its cognitive, behavioral, and biological effects in relation to current neurological theory of the disorder. While these treatments have demonstrated positive effects on some measures, there are limitations, as studies have failed to demonstrate generalization to critical measures, such as teacher-rated classroom behaviors, and have provided limited but growing evidence of functionally significant improvements in behavior. There is also a clear lack of research on the effects of training on reward systems and self-control. These limitations may be addressed by broadening the scope and procedures of the training and incorporating research concepts from other fields of study. First, it is important to consider the developmental trajectories of brain regions in individuals with the disorder, as they may relate to the effectiveness of cognitive training. Notions from behavioral economics, including delay discounting and framing (i.e., context) manipulations that influence present orientation, also have applications in the study of cognitive training in ADHD. In considering these other domains, we may find new ways to conceptualize and enhance cognitive training in ADHD and, in turn, address current limitations of interventions that fall in this category.

Increased capacity to delay reward in anorexia nervosa

Individuals with anorexia nervosa (AN) are often characterized as possessing excessive self-control and are unusual in their ability to reduce or avoid the consumption of palatable foods. This behavior promotes potentially life-threatening weight loss and suggests disturbances in reward processing. We studied whether individuals with AN showed evidence of increased self-control by examining the tendency to delay receipt of a monetary, non-food related, reward. Underweight AN (n = 36) and healthy controls (HC, n = 28) completed a monetary intertemporal choice task measuring delay discounting factor. Individuals with AN reduced the value of a monetary reward over time significantly less than HC (F[1,61] = 5.03; p = 0.029). Secondary analyses indicated that the restricting subtype of AN, in particular, showed significantly less discounting than HC (F[1,46] = 8.3; p = 0.006). These findings indicate that some individuals with AN show less temporal discounting than HC, suggestive of enhanced self-control that is not limited to food consumption. This is in contrast to other psychiatric disorders, for example, substance abuse, which are characterized by greater discounting. Though preliminary, these findings suggest that excessive self-control may contribute to pathological processes and individuals with AN may have neuropsychological characteristics that enhance their ability to delay reward and thereby may help to maintain persistent food restriction.

Measurement-induced focusing and the magnitude of loss aversion: The difference between comparing gains to losses and losses to gains

Research has identified loss aversion as a strong and robust phenomenon, but has also revealed some moderators affecting the magnitude of its effect on decision making. In the current article, we draw attention to the fact that even the measurement of loss aversion itself may affect its magnitude by inducing a focus on either losses or gains. In three studies, we provide empirical evidence for such a measurement-induced focus. In all studies we used coin-toss gambles—in which there is a 50/50 chance to win or to lose—to assess gain/loss ratios as a measure of loss aversion. Participants either filled out the loss side or the gain side of this gain/loss ratio. The studies consistently showed that—using within- and between-subject designs and anticipated and real coin-toss gambles—the strength of loss aversion depended on the measurement format (fill-in-the-loss versus fill-in-the-gain); filling in the loss side increased loss aversion. Moreover, loss aversion was more affected by the stakes of the gamble in the fill-in-the-loss format than in the fill-in-the-gain format.

The psychological distance of climate change

Avoiding dangerous climate change is one of the most urgent social risk issues we face today and understanding related public perceptions is critical to engaging the public with the major societal transformations required to combat climate change. Analyses of public perceptions have indicated that climate change is perceived as distant on a number of different dimensions. However, to date there has been no in-depth exploration of the psychological distance of climate change. This study uses a nationally representative British sample in order to systematically explore and characterize each of the four theorized dimensions of psychological distance--temporal, social, and geographical distance, and uncertainty--in relation to climate change. We examine how each of these different aspects of psychological distance relate to each other as well as to concerns about climate change and sustainable behavior intentions. Results indicate that climate change is both psychologically distant and proximal in relation to different dimensions. Lower psychological distance was generally associated with higher levels of concern, although perceived impacts on developing countries, as an indicator of social distance, was also significantly related to preparedness to act on climate change. Our findings clearly point to the utility of risk communication techniques designed to reduce psychological distance. However, highlighting the potentially very serious distant impacts of climate change may also be useful in promoting sustainable behavior, even among those already concerned.

Four days later in Cincinnati: longitudinal tests of hyperbolic discounting

Hyperbolic discounting of delayed rewards has been proposed as an underlying cause of the failure to stick to plans to forego one's immediate desires, such as the plan to diet, wake up early, or quit taking heroin. We conducted two tests of inconsistent planning in which respondents made at least two choices between a smaller-sooner (SS) and larger-later (LL) amount of money, one several weeks before SS would be received, and one immediately before. Hyperbolic discounting predicts that there would be more choices of SS as it became more proximate-and, equivalently, that among those who change their mind, "impatient shifts" (LL-to-SS) will be more common than "patient shifts" (SS-to-LL). We find no evidence for this, however, and in our studies shifts in both directions were equally likely. We propose that some of the evidence cited on behalf of hyperbolic discounting can be attributed to qualitatively different psychological mechanisms.

A new intuitionism: Meaning, memory, and development in Fuzzy-Trace Theory

Combining meaning, memory, and development, the perennially popular topic of intuition can be approached in a new way. Fuzzy-trace theory integrates these topics by distinguishing between meaning-based gist representations, which support fuzzy (yet advanced) intuition, and superficial verbatim representations of information, which support precise analysis. Here, I review the counterintuitive findings that led to the development of the theory and its most recent extensions to the neuroscience of risky decision making. These findings include memory interference (worse verbatim memory is associated with better reasoning); nonnumerical framing (framing effects increase when numbers are deleted from decision problems); developmental decreases in gray matter and increases in brain connectivity; developmental reversals in memory, judgment, and decision making (heuristics and biases based on gist increase from childhood to adulthood, challenging conceptions of rationality); and selective attention effects that provide critical tests comparing fuzzy-trace theory, expected utility theory, and its variants (e.g., prospect theory). Surprising implications for judgment and decision making in real life are also discussed, notably, that adaptive decision making relies mainly on gist-based intuition in law, medicine, and public health.

Focusing on what you own: Biased information uptake due to ownership

The endowment effect has been debated for over 30 years. Recent research suggests that differential focus of attention might play a role in shaping preferences. In two studies we investigated the role of biased attention in the emergence of endowment effects. We thereby derive predictions from an extended version of evidence accumulation models by additionally assuming a bias in attentional allocation based on one’s endowment status. We test these predictions against an alternative account in which the endowment effect is the result of initial anchoring and adjustment differences (Sequential Value Matching model; Johnson & Busemeyer, 2005). In both studies we add deliberation time constraints to a standard Willingness-to-Accept/Willingness-to-Pay paradigm and consistently find that the endowment effect grows as deliberation time increases. In Study 2 we additionally use eye tracking and find that buyers focus more on value decreasing attributes than sellers (and vice versa for value increasing attributes). This shift in attention plays a pivotal role in the construction of value and partially mediates the endowment effect.

The hippocampus and imagining the future: where do we stand?

Recent neuroimaging work has demonstrated that the hippocampus is engaged when imagining the future, in some cases more than when remembering the past. It is possible that this hippocampal activation reflects recombining details into coherent scenarios and/or the encoding of these scenarios into memory for later use. However, inconsistent findings have emerged from recent studies of future simulation in patients with memory loss and hippocampal damage. Thus, it remains an open question as to whether the hippocampus is necessary for future simulation. In this review, we consider the findings from patient studies and the neuroimaging literature with respect to a new framework that highlights three component processes of simulation: accessing episodic details, recombining details, and encoding simulations. We attempt to reconcile these discrepancies between neuroimaging and patient studies by suggesting that different component processes of future simulation may be differentially affected by hippocampal damage.

A query theory account of the effect of memory retrieval on the sunk cost bias

The sunk cost bias occurs when individuals continue to invest in the same option when better alternatives are available. Many researchers believe that this bias is due to overemphasizing the past investment over the (missed) opportunities offered by alternatives. As an alternative or complement to this view, we show that memory retrieval and attention play important roles in the sunk cost bias. In two experiments, individuals generated more reasons for pursuing the invested option than for an alternative; they generated those reasons earlier in a sequence of reasons; and these effects increased as the individuals made progress toward attaining the reward yielded by the invested option. Associated with these effects, individuals perceived an increasingly wide gap in value between the invested and alternative options as they progressed toward the goal, thereby creating the sunk cost bias. Forcing individuals to reverse the order in which they generated reasons for the invested and alternative options reduced the bias. [corrected]

INCREASING SAVING BEHAVIOR THROUGH AGE-PROGRESSED RENDERINGS OF THE FUTURE SELF

Many people fail to save what they need to for retirement (Munnell, Webb, and Golub-Sass 2009). Research on excessive discounting of the future suggests that removing the lure of immediate rewards by pre-committing to decisions, or elaborating the value of future rewards can both make decisions more future-oriented. In this article, we explore a third and complementary route, one that deals not with present and future rewards, but with present and future selves. In line with thinkers who have suggested that people may fail, through a lack of belief or imagination, to identify with their future selves (Parfit 1971; Schelling 1984), we propose that allowing people to interact with age-progressed renderings of themselves will cause them to allocate more resources toward the future. In four studies, participants interacted with realistic computer renderings of their future selves using immersive virtual reality hardware and interactive decision aids. In all cases, those who interacted with virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones.

Individual differences in impulsivity predict anticipatory eye movements

Impulsivity is the tendency to act without forethought. It is a personality trait commonly used in the diagnosis of many psychiatric diseases. In clinical practice, impulsivity is estimated using written questionnaires. However, answers to questions might be subject to personal biases and misinterpretations. In order to alleviate this problem, eye movements could be used to study differences in decision processes related to impulsivity. Therefore, we investigated correlations between impulsivity scores obtained with a questionnaire in healthy subjects and characteristics of their anticipatory eye movements in a simple smooth pursuit task. Healthy subjects were asked to answer the UPPS questionnaire (Urgency Premeditation Perseverance and Sensation seeking Impulsive Behavior scale), which distinguishes four independent dimensions of impulsivity: Urgency, lack of Premeditation, lack of Perseverance, and Sensation seeking. The same subjects took part in an oculomotor task that consisted of pursuing a target that moved in a predictable direction. This task reliably evoked anticipatory saccades and smooth eye movements. We found that eye movement characteristics such as latency and velocity were significantly correlated with UPPS scores. The specific correlations between distinct UPPS factors and oculomotor anticipation parameters support the validity of the UPPS construct and corroborate neurobiological explanations for impulsivity. We suggest that the oculomotor approach of impulsivity put forth in the present study could help bridge the gap between psychiatry and physiology.

Implications of cognitive load for hypothesis generation and probability judgment

We tested the predictions of HyGene (Thomas et al., 2008) that both divided attention at encoding and judgment should affect the degree to which participants' probability judgments violate the principle of additivity. In two experiments, we showed that divided attention during judgment leads to an increase in subadditivity, suggesting that the comparison process for probability judgments is capacity limited. Contrary to the predictions of HyGene, a third experiment revealed that divided attention during encoding leads to an increase in later probability judgment made under full attention. The effect of divided attention during encoding on judgment was completely mediated by the number of hypotheses participants generated, indicating that limitations in both encoding and recall can cascade into biases in judgments.

Query theory: Knowing what we want by arguing with ourselves

Mercier and Sperber (M&S) argue that reasoning is social and argumentative, and that this explains many apparently irrational judgment phenomena. We look at the relationship between interpersonal and intrapersonal argumentation and discuss parallels and differences from the perspective of query theory, a memory-based model of constructive preferences. We suggest an important goal is to integrate models across inference and preference.

Culture and Judgment and Decision Making

Cultural influences on individual judgment and decision making are increasingly understood in terms of dynamic constructive processing and the structures in social environments that shape distinct processing styles, directing initial attentional foci, activating particular judgment schemas and decision strategies, and ultimately reinforcing some judgment and decision making (JDM) patterns over others. These structures include the society’s observable patterns of normative actions and responses, its prevalent forms of interpersonal interaction, the typical size and density of social networks, the ideational frames represented publically in texts and institutions, and so forth. We review this emerging perspective on culture and JDM in both economic and social domains, noting the distinctive insights it yields. We suggest new ways that cultural research is becoming relevant to mainstream JDM researchers, while also recognizing issues in need of further research.

Construal-level theory of psychological distance

People are capable of thinking about the future, the past, remote locations, another person's perspective, and counterfactual alternatives. Without denying the uniqueness of each process, it is proposed that they constitute different forms of traversing psychological distance. Psychological distance is egocentric: Its reference point is the self in the here and now, and the different ways in which an object might be removed from that point-in time, in space, in social distance, and in hypotheticality-constitute different distance dimensions. Transcending the self in the here and now entails mental construal, and the farther removed an object is from direct experience, the higher (more abstract) the level of construal of that object. Supporting this analysis, research shows (a) that the various distances are cognitively related to each other, (b) that they similarly influence and are influenced by level of mental construal, and (c) that they similarly affect prediction, preference, and action.

Construal-level theory of psychological distance

People are capable of thinking about the future, the past, remote locations, another person's perspective, and counterfactual alternatives. Without denying the uniqueness of each process, it is proposed that they constitute different forms of traversing psychological distance. Psychological distance is egocentric: Its reference point is the self in the here and now, and the different ways in which an object might be removed from that point-in time, in space, in social distance, and in hypotheticality-constitute different distance dimensions. Transcending the self in the here and now entails mental construal, and the farther removed an object is from direct experience, the higher (more abstract) the level of construal of that object. Supporting this analysis, research shows (a) that the various distances are cognitively related to each other, (b) that they similarly influence and are influenced by level of mental construal, and (c) that they similarly affect prediction, preference, and action.

A Dirty Word or a Dirty World?

We explored the effect of attribute framing on choice, labeling charges for environmental costs as either an earmarked tax or an offset. Eight hundred ninety-eight Americans chose between otherwise identical products or services, where one option included a surcharge for emitted carbon dioxide. The cost framing changed preferences for self-identified Republicans and Independents, but did not affect Democrats’ preferences. We explain this interaction by means of query theory and show that attribute framing can change the order in which internal queries supporting one or another option are posed. The effect of attribute labeling on query order is shown to depend on the representations of either taxes or offsets held by people with different political affiliations.

Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation

Individual differences in cognitive abilities and skills can predict normatively superior and logically consistent judgments and decisions. The current experiment investigates the processes that mediate individual differences in risky choices. We assessed working memory span, numeracy, and cognitive impulsivity and conducted a protocol analysis to trace variations in conscious deliberative processes. People higher in cognitive abilities made more choices consistent with expected values; however, expected-value choices rarely resulted from expected-value calculations. Instead, the cognitive ability and choice relationship was mediated by the number of simple considerations made during decision making — e.g., transforming probabilities and considering the relative size of gains. Results imply that, even in simple lotteries, superior risky decisions associated with cognitive abilities and controlled cognition can reflect metacognitive dynamics and elaborative heuristic search processes, rather than normative calculations. Modes of cognitive control (e.g., dual process dynamics) and implications for process models of risky decision-making (e.g., priority heuristic) are discussed.

Dissociable neural representations of future reward magnitude and delay during temporal discounting

In temporal discounting, individuals often prefer smaller immediate rewards to larger delayed rewards, implying a trade off between the magnitude and delay of future rewards. While recent functional magnetic resonance imaging (fMRI) investigations of temporal discounting have generated conflicting findings, no studies have focused on whether distinct neural substrates respond to the magnitude and delay of future rewards. Combining a novel, temporally distributed discounting task with event-related fMRI, we found that while nucleus accumbens (NAcc), mesial prefrontal cortical (MPFC), and posterior cingulate cortical (PCC) activation positively correlated with future reward magnitude, dorsolateral prefrontal cortical (DLPFC) and posterior parietal cortical (PPC) activation negatively correlated with future reward delay. Further, more impulsive individuals showed diminished NAcc activation to the magnitude of future rewards and greater deactivations to delays of future rewards in the MPFC, DLPFC, and PPC. These findings suggest that while mesolimbic dopamine projection regions show greater sensitivity to the magnitude of future rewards, lateral cortical regions show greater (negative) sensitivity to the delay of future rewards, potentially reconciling different neural accounts of temporal discounting.

Subjective and objective risk of ovarian cancer in Ashkenazi Jewish women testing for BRCA1/2 mutations

OBJECTIVE

Ovarian cancer is the leading cause of gynecological death in the United States, and 14% of ovarian cancer cases are attributed to BRCA1/2 hereditary mutations. This study examined (1) change in subjective ovarian cancer risk in response to genetic counseling and testing, (2) accuracy of subjective ovarian cancer risk estimates, and (3) new methods for conceptualizing subjective ovarian cancer risk based on Leventhal's Common Sense Model, in women at increased risk to carry BRCA1/2 mutations.

METHODS

Women (n=78) were asked their subjective risk of ovarian cancer (in terms of a percentage, estimated survival time, and projected age of onset) at pre-counseling, post-counseling, 1 week post-result, and 6 months post-result.

RESULTS

Women with a personal history of breast cancer were most inaccurate at pre- but improved post-counseling. Subjective survival time increased post-counseling. Accuracy of subjective risk improved at post-result for those with uninformative negative results. Subjective percentage risk and subjective survival time decreased at 6 months.

CONCLUSIONS

Subjective risk changed in response to genetic counseling and testing. Common Sense Model-derived assessments of risk may be useful for understanding the impact of genetic counseling and testing.

PRACTICE IMPLICATIONS

Genetic counseling can assist women at risk of carrying BRCA1/2 mutations to understand their risk of ovarian cancer, and genetic testing further refines their risk.