Discounting Future Reward in an Uncertain World.

ABSTRACT: Humans discount delayed relative to more immediate reward. A plausible explanation is that impatience arises partly from uncertainty, or risk, implicit in delayed reward. Existing theories of discounting-as-risk focus on a probability that delayed reward will not materialize. By contrast, we examine how uncertainty in the magnitude of delayed reward contributes to delay discounting. We propose a model wherein reward is discounted proportional to the rate of random change in its magnitude across time, termed volatility. We find evidence to support this model across three experiments (total N = 158). First, using a task where participants chose when to sell products, whose price dynamics they previously learned, we show discounting increases in line with price volatility. Secon

SUBMITTER: Story GW 

PROVIDER: S-EPMC11949085 | biostudies-literature | 2024 Apr

REPOSITORIES: biostudies-literature