Framing effects in intertemporal choice tasks and financial implications |
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| Affiliation: | 1. Department of Economics, University of Munich, Geschwister-Scholl-Platz 1, D-80539 Munich, Germany;2. Department of Economics, University of Gothenburg, Box 640, 405 30 Gothenburg, Sweden;3. School of Economics and Finance, Queensland University of Technology, 4000 Brisbane, Australia;1. Department of Human Sciences, The Ohio State University, 1787 Neil Avenue, Columbus, OH 43210, USA;2. Centre for Decision Research, Leeds University Business School, Leeds LS29JT, UK;3. Department of Policy Analysis and Management, Cornell University, Ithaca, NY 14853, USA;1. School of Economics, University of Nottingham, University Park, Nottingham NG7 2RD, United Kingdom;2. Department of Social Policy, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, United Kingdom;1. Department of Economics and Finance, University of Wyoming, 1000 E. University Ave., Laramie, WY 82071, United States;2. HUI Research AB, 103 29 Stockholm, Sweden;3. AgriFood Economics Centre, Lund University School of Economics and Management, Box 730, 220 07 Lund, Sweden;4. Department of Food and Resource Economics, University of Copenhagen, Rolighedsvej 25, 1958 Frederiksberg C, Denmark |
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| Abstract: | In this paper, we examine differences in choice patterns between delay and speedup frames and refer to these differences in choice tasks as time framing effects. Framing effects in choice tasks seem to be less significant than corresponding framing effects in matching tasks and this result seems to be in line with the conclusions of previous studies. More interestingly, we also find that time framing effects are stronger for questions involving negative outcomes. We explain this experimental result by distinguishing between out-of-pocket costs incurred by delaying fines and opportunity costs from speeding up rewards with the latter costs being less disturbing than the former. In order to validate our theory, we also investigate borrowing and lending decisions of private households via a panel analysis across 54 countries empirically and show that household behavior is in line with our theory. |
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| Keywords: | Experiments Household decision making Discounting Framing Preference reversals |
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