Side Effects in Time Discounting Procedures: Fixed Alternatives Become the Reference Point

RESEARCH ARTICLE Side Effects in Time Discounting Procedures: Fixed Alternatives Become the Reference Point Przemysław Sawicki*☯, Michał Białek☯ Kozminski University, Centre for Economic Psychology and Decision Sciences, Jagiellonska 59, Warsaw 03–301, Poland ☯ These authors contributed equally to this work. * a11111 Abstract OPEN ACCESS Citation: Sawicki P, Białek M (2016) Side Effects in Time Discounting Procedures: Fixed Alternatives Become the Reference Point. PLoS ONE 11(10): e0165245. doi:10.1371/journal.pone.0165245 Editor: Eldad Yechiam, Technion Israel Institute of Technology, ISRAEL Typical research on intertemporal choice utilizes a two-alternative forced choice (2AFC) paradigm requiring participants to choose between a smaller sooner and larger later payoff. In the adjusting-amount procedure (AAP) one of the alternatives is fixed and the other is adjusted according to particular choices made by the participant. Such a method makes the alternatives unequal in status and is speculated to make the fixed alternative a reference point for choices, thereby affecting the decision made. The current study shows that fixing different alternatives in the AAP influences discount rates in intertemporal choices. Specifically, individuals’ (N = 283) choices were affected to just the same extent by merely fixing an alternative as when choices were preceded by scenarios explicitly imposing reference points. Received: April 30, 2016 Accepted: October 7, 2016 Published: October 21, 2016 Copyright: © 2016 Sawicki, Białek. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Data Availability Statement: All relevant data are within the paper and its Supporting Information files. Funding: The current project was financed by the Polish National Science Centre (NCN), decision no. 2013/11/D/HS6/04604; http://www.nauka.gov.pl. The funding body had no role in the study design, data collection and analysis, the decision to publish, or preparation of the manuscript. Author who received the funding is PS. Competing Interests: The authors have declared that no competing interests exist. Introduction In a landmark study, Mischel et al. [1] presented four-year-old children with a marshmallow and told them that if they waited fifteen minutes they would receive two instead of just the one initially offered. Some children resisted the temptation of immediate consumption while others did not. The former fared better in follow-up studies measuring their Scholastic Aptitude Test (SAT) performance, ability to cope with personal problems, etc., and had more healthy body mass indices (BMI). In another study, Moffitt et al. [2] showed that, as adults, more impatient children tend to be less healthy, more obese, have worse financial and working situations, and tend to be less happy in their romantic relationships. The above research suggests that knowledge of people’s ability to delay gratification can be a good predictor of their future wellbeing. Delaying gratification, as done in the marshmallow test, constitutes a simple one-shot choice which can be studied in a natural environment. However, this does not permit the cognitive processes underlying a decision to be controlled [3]. Therefore behavioral researchers have developed more sophisticated methods to allow calculation of people’s discount rates. The term discount rate describes people’s ability to delay payoffs: a higher discount rate indicates a weaker ability to delay payoffs and a lower discount rate indicates a stronger ability to delay payoffs. PLOS ONE | DOI:10.1371/journal.pone.0165245 October 21, 2016 1 / 11 Side Effects in Time Discounting Procedures The simplest technique among these methods is the matching choice method: a person is explicitly asked to indicate an amount that they would want to receive in the future as the equivalent of a present given amount, e.g., what is the least amount you would want to receive in 3 months instead of having $100 now? [4,5]. A variation of this method is to ask people to select the expected amount from a drop-down menu [6]. Another group of methods involves the two-alternative forced choice paradigm (2AFC), in which people select between smaller sooner (SS) and larger later (LL) payoffs. Of these two alternatives, one is fixed and the other varies. The most prominent methods used are the staircase method and the adjusting amount procedure (AAP) [7]. In the staircase method, the varying alternative is presented in ascending or descending order, and the procedure stops when a person changes their preference from one alternative to the other [8,9]. For example, if considering the delayed equivalent of $5,000 (SS), a person decides between this and LL—$5,100. If they decide to take LL, the procedure stops, if they decide in favor of SS, LL increases, e.g., to $5,200. The indifference point for SS and LL is the mean of the two last steps, i.e. $5,050 if the staircase ends at the first step, $5,150 if it ends at the second, etc. The order of presentation of the varying alternative has a significant impact on discount rates[10]. In the AAP, the varying amount is adjusted according to choices made by the participant [11–13]. For example, where a researcher aims to calculate the indifference point for LL, the first step requires a choice between SS and LL, where SS is typically equal to half of LL. Choosing LL increases the value of SS in the next step, but choosing SS decreases its value in the next step. The degree of adjustment decreases by a half in consecutive steps until the difference is acceptably small (so called granularity [14]). The SS-LL indifference point is the mean of the last two steps. All of the above methods are used repeatedly for different delays and provide a set of indifference points. These indifference points serve as a basis for calculating discount rates. There are two methods of doing this: fitting the points to a curve using either a hyperbolic or exponential formula [15,16], or calculating the area under the curve (AUC) [17]. We will use the latter, as it is assumption free, and will provide its detailed description in the next paragraphs. A common feature of all the mentioned methods is that one option is fixed and the other is determined by the participant, and this unequal status of alternatives can have an impact on participants’ choices. The aim of the present work was to investigate this impact experimentally. We tested the idea that the unequal status of alternatives can be confounded with certain experimental manipulations, such as imposing a temporal reference point. Typical methods used to explore the factors affecting discount rates use scenarios which precede the method of calculating discount rates, and which explicitly impose a reference point. Reference points aff (...truncated)