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Percent framing attenuates the magnitude effect in a preference-matching task of intertemporal choice

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  • Farid Anvari
  • Dorina-Diana Verdeș
  • Davide Marchiori

Abstract

Research in intertemporal decisions shows that people value future gains less than equivalent but immediate gains by a factor known as the discount rate (i.e., people want a premium for waiting to receive a reward). A robust phenomenon in intertemporal decisions is the finding that the discount rate is larger for small gains than for large gains, termed the magnitude effect. However, the psychological underpinnings of this effect are not yet fully understood. One explanation proposes that intertemporal choices are driven by comparisons of features of the present and future choice options (e.g., information on rewards). According to this explanation, the hypothesis is that the magnitude effect is stronger when the absolute difference between present and future rewards is emphasized, compared to when their relative difference is emphasized. However, this hypothesis has only been tested using one task (the two-choice paradigm) and only for gains (i.e., not losses). It’s therefore unclear whether the findings that support the hypothesis can be generalized to different methodological paradigms (e.g., preference matching) and to the domain of losses. To address this question, we conducted experiments using the preference-matching method whereby the premium amounts that people could ask for were framed in terms of either currencies (emphasizing absolute differences) or percentages (emphasizing relative differences). We thus tested the robustness of the evidence in support of the hypothesis that percent framing, relative to currency framing, attenuates the magnitude effect in the domain of gains (Studies 1, 2, and 3) and in the domain of losses (Study 1, 3, and 4). The data were heavily skewed and the assumption of equal variances was violated. Therefore, in place of parametric statistical tests, we calculated and interpreted parametric and nonparametric standardized and unstandardized effect size estimates and their confidence intervals. Overall, the results support the hypothesis.

Suggested Citation

  • Farid Anvari & Dorina-Diana Verdeș & Davide Marchiori, 2022. "Percent framing attenuates the magnitude effect in a preference-matching task of intertemporal choice," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-15, January.
  • Handle: RePEc:plo:pone00:0262620
    DOI: 10.1371/journal.pone.0262620
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    References listed on IDEAS

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