Time Preference in Decisions With Recurring Payoffs

Abstract

Time preference plays a central role in decision-making, shaping how individuals value outcomes that occur at different points in time. While most research on time preference focuses on one-off payoffs, many real-world decisions generate recurring consequences that unfold continuously over time. Despite their prevalence, little is known about how recurring payoff structures influence intertemporal preferences. We propose that recurring payoffs reduce discounting by promoting temporal integration. By highlighting the continuity of future consequences, recurring payoffs encourage individuals to form a more temporally integrated representation of outcomes rather than evaluating consequences as isolated events. Drawing on the choice isolation argument and the literature on choice bundling and choice bracketing, we argue that this representation reduces the salience of immediate-versus-delayed trade-offs and ultimately lowers discount rates. We test this hypothesis in two experiments involving 284 individuals. Participants completed intertemporal choice tasks in either the gain or loss domain, with choices varying along two additional dimensions: payoff structure (one-off vs. recurring) and outcome magnitude (small vs. large). Results revealed significantly lower discounting in recurring payoff conditions than in comparable one-off conditions. The findings are consistent with the proposition that recurring payoff structures encourage a more temporally integrated evaluation of future outcomes, leading individuals to place less weight on immediacy when making intertemporal choices. This study extends the time-preference literature by introducing recurring payoff structures as a distinct class of intertemporal outcomes and identifying temporal integration as a potential mechanism through which payoff structure influences discounting. It further demonstrates that the magnitude effect extends to recurring payoff environments, suggesting that outcome size continues to shape discounting even when consequences unfold repeatedly over time. These findings suggest that making the recurring nature of future consequences salient may be a promising avenue for promoting more future-oriented decision-making.