Temporal Discounting and Number Representation

Abstract

Intertemporal decisions usually involve numbers: subjects decide between rewards, with different delays and probabilities. This paper is a brief overview of findings in the area of number cognition, followed by some theoretical applications of these findings in intertemporal decisions. In particular, the fact that numbers are neither linearly perceived nor processed has interesting consequences in the analysis of decisions that involve numbers. Two conflicting possibilities arise, (1) Intertemporal decisions are not about time but about number comparisons, or (2) intertemporal decisions are indeed about time but with the relevant numbers compressed in their logarithmic form.

Keywords:

• Intertemporal choice
• Behavioral economics
• Neuroeconomics
• Number representation
• Cognition