Shohei Yamamoto

Our decisions frequently involve combinations of gains and losses occurring at different points in time, such as enduring early losses for future gains (investments) or enjoying immediate gains at the expense of future losses (loans). This research introduces novel experiments that examine how binary intertemporal payment options, framed as either investments or loans, influence decision-making. Each option comprised two payment components: common payments, which are identical between the options, and focal payments, which vary between the options. Through strategic manipulation of these payments, the research explores how Investment or Loan frames affect time preferences. Our three studies consistently indicate that the common payments tend to be disregarded and thus the preferences are affected by framing. Notably, this remained true even when common payments were substantial (Study 2), and the framing effect was also found in scenarios where decisions carried real financial consequences (Study 3).

Previous research has focused on studying the endowment effect for transactions that take place in the present. Many real-world transactions, however, are delayed into the future (i.e., people agree to buy or sell, but the actual transaction does not materialize until a later time). Here we investigate how transaction timing affects the endowment effect. In five studies, we show that the endowment effect systematically increases as transactions are delayed into the future. Specifically, buying prices significantly decrease as the transaction is delayed, while selling prices remain constant, resulting in an amplified endowment effect (Experiment 1). This pattern is not produced by a discounting of the money involved in the transaction (Experiment 2), and it holds across different types of items (Experiment 3). We also show that the phenomenon cannot be explained by sellers anticipating becoming increasingly attached to the items over time (Experiment 4). Finally, we demonstrate that this increased endowment effect in the future holds in the field, in the context of a real market and with real transactions (Experiment 5).