Psychophysics of time perception and valuation in temporal discounting of gain and loss

Ruokang Han and Taiki Takahashi

Physica A: Statistical Mechanics and its Applications, 2012, vol. 391, issue 24, 6568-6576

Abstract: Anomalies in intertemporal choice (e.g. “hyperbolic” discounting and sign effect) have been investigated in econophysics and behavioral neuroeconomics. We experimentally examined the roles of psychophysical effects of time perception and subjective valuation of outcomes (value function) on temporal discounting of gain and loss, by utilizing a q-exponential temporal discounting model developed in Tsallis’s thermostatistics. Consequently, we demonstrated that both “hyperbolic” discounting and the sign effect (i.e. gain is more steeply time-discounted than loss) are due to psychophysical effects of time perception (i.e., nonlinearity and gain–loss asymmetry). Implications of the present study for neuroeconomics and econophysics are discussed.

Keywords: Time discounting; Psychological time; Sign effect; Psychophysics; Behavioral economics (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:391:y:2012:i:24:p:6568-6576

DOI: 10.1016/j.physa.2012.07.012

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Physica A: Statistical Mechanics and its Applications is currently edited by K. A. Dawson, J. O. Indekeu, H.E. Stanley and C. Tsallis

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