How time flies!

Abstract

The paper points out a potential gap between intertemporal choices and time preference: The observed intertemporal decisions could be partly driven by a biased perception of time, and thus may not completely reveal the actual time preference. To test this conjecture, we explore the relationship between time perception and intertemporal choices by conducting a laboratory experiment, in which cognitive load is used as an instrument to manipulate time perception. We establish that the perceived time lengths for subjects with high cognitive load are shorter than those with low load. We also observe a correlation between an individual's time overestimation and his apparent impatience. Our study suggests that time perception indeed mediates part of the cognitive load's effect on intertemporal choices, calling for improving suboptimal time-related decisions as a result of potentially biased perception of how time flies.