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How time flies!

Author

Listed:
  • Xiu Chen

    (College of Business, Southern University of Science and Technology)

  • Xiaojian Zhao

    (Monash University)

Abstract

The paper identifies a potential gap between intertemporal choices and time preference: The elicited intertemporal decisions could be partly driven by a biased perception of time and thus may not completely reveal the actual time preference. To test this, we explore the causal relationship between time perception and intertemporal choices by conducting a laboratory experiment, in which cognitive load is used as a stimulating instrument to induce differences in time perception. We establish that the perceived time lengths for subjects with high cognitive load are shorter than those with low cognitive load and that individuals who underestimate time appear more patient in their intertemporal decisions. The mediation analyses show that time perception mediates a significant part of the cognitive load’s effect on intertemporal choices. Our study thus demonstrates that the time preference identified by intertemporal choices might be confounded by the potentially biased perception of how time flies.

Suggested Citation

  • Xiu Chen & Xiaojian Zhao, 2021. "How time flies!," Monash Economics Working Papers 2021-09, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2021-09
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    More about this item

    Keywords

    time perception; intertemporal choice; time preference; cognitive load;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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