Beyond Discounting: Time Preference in Decision-Making
P. Gülüm Taş (TU Delft - Technology, Policy and Management)
J. Rezaei – Promotor (TU Delft - Technology, Policy and Management)
M.Y. Maknoon – Copromotor (TU Delft - Technology, Policy and Management)
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Abstract
Daily life is shaped by countless decisions, most of which involve intertemporal trade-offs. Time preference plays a crucial role in how individuals evaluate alternatives across time and often leads them to make choices that compromise long-term interests. For instance, people generally prefer smaller, sooner rewards over larger, later ones mainly because of their tendency to discount future benefits. Intertemporal judgments are further affected by numerous biases that systematically distort perceptions of time and value, altering trade-offs and often producing deviations from normative models such as exponential discounting. Consequently, decisionmaking frequently departs from the principles of rational choice, underscoring the importance of investigating time preferences and associated biases to enhance immediate decision outcomes while safeguarding long-term welfare. Given the pervasive role of time in almost every aspect of life, investigating these phenomena can enhance choices and contribute to the overall wellbeing of individuals and societies. Despite the well-established importance and prevalence of the topic, several key aspects remain underexplored.
This dissertation investigates how time preference and time-related cognitive biases affect judgments and preferences in decision analysis, and discusses strategies to mitigate their negative impacts. Guided by this main objective, the study integrates descriptive and prescriptive perspectives to build a more comprehensive understanding of intertemporal decision-making and its various real-world implications. Methodologically, it adopts a mixed approach that combines systematic literature reviews, conceptual analysis, and experimental studies, thereby drawing on both qualitative and quantitative evidence. This design enables the investigation of mechanisms underlying intertemporal trade-offs, the exploration of their role in multi-objective decision frameworks, and the empirical testing of their effects under controlled conditions.....