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Time is on my side: optimism in intertemporal choice
1Department of Social Psychology, University of Amsterdam, The Netherlands. sp_berndsen@macmail.psy.uva.nl
Acta Psychologica
|September 25, 2001
Summary
Optimism influences how people value future rewards and punishments. Higher optimism leads to higher discount rates for both gains and losses, affecting financial and health decisions.
Area of Science:
- Behavioral Economics
- Decision Science
- Psychology
Background:
- Time preferences, or discount rates, significantly impact decisions involving future outcomes.
- Optimism, a cognitive bias, may systematically influence these time preferences.
- Understanding this relationship is crucial for fields ranging from finance to public health.
Purpose of the Study:
- To investigate the asymmetric effects of optimism on time preferences for gains versus losses.
- To determine how optimism influences the rate at which individuals discount future monetary and health-related outcomes.
Main Methods:
- Two studies were conducted, examining monetary outcomes (Study 1) and health outcomes (Study 2).
- Participants' optimism levels were assessed and correlated with their stated time preferences for hypothetical gains and losses.
Main Results:
- Optimism demonstrated asymmetric effects on time preferences for gains and losses.
- Increased optimism was associated with higher discount rates, leading to a preference for immediate gains and delayed losses.
- Low optimism reduced discount rates, indicating a greater willingness to wait for future outcomes.
Conclusions:
- Optimism plays a significant role in shaping individual time preferences, with implications for real-world decision-making.
- The findings suggest that interventions aimed at managing optimism could potentially influence financial and health-related choices.
- Future research should explore the mechanisms underlying optimism's impact on intertemporal choices.
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