Intertemporal choice

How do we trade off present and future rewards?

In our life we are constantly confronted with trade-offs between rewards of different sizes available at different times. A good example is the decision to consume now, or to save and consume (more) later. This aspect of behaviour plays a key role in many economic and health issues such as retirement savings and addiction.

Our understanding of the processes that generate intertemporal choices and the factors that influence it is still in its infancy. We have been involved in several projects trying to further our understanding of this crucial aspect of behaviour.

In one project, we showed how intertemporal choice is affected by the biological clock. Another project, in collaboration with the Decision Neuroscience Lab, investigates to what extent differences in intertemporal choice can be explained with differences in number processing in the brain. In a separate series of projects, also in collaboration with the Decision Neuroscience Lab, we have been investigating to what extent and in which ways the environment (context) influences intertemporal choice. One particular aspect of decision context we have been looking at is physiological state.

Other related work in this area examines aspects of important real-world behaviours involving intertemporal choice. One project, in collaboration with colleagues in the Department of Finance, the Melbourne Institute and Towers Watson, examines the adequacy of retirement savings. Another project, in collaboration with the Monash Clinical and Imaging Neuroscience lab, the Melbourne Neuropsychiatry Centre and the Melbourne School of Psychological Sciences, investigates problem gambling.

References:
Fung B, Crone D, Bode S, Murawski C. Cardiac signals are independently associated with temporal discounting and time perception. Frontiers in Human Neuroscience, in press.
Murawski C, Harris PG, Bode S, Dominguez D JF, Egan GF (2012). Led into temptation? Rewarding brand logos bias the neural encoding of incidental economic decisions. PLoS ONE 7(3):e34155. article
Ray D, Bossaerts P (2011). Positive dependence of the biological clock implies hyperbolic discounting. Frontiers in Neuroscience 5(2). article