Psychophysical neuroeconomics of decision making: Nonlinear time perception commonly explains anomalies in temporal and probability discounting

Abstract

Anomalies in decision over time (e.g., “hyperbolic time discounting”) and under risk (e.g., Allais paradox and hyperbolic probability discounting) have been attracting attention in behavioral and neuroeconomics. We have proposed that psychophysical time commonly explains anomalies in both decisions (Takahashi, 2011, Physica A; Takahashi et al, 2012, J Behav Econ & Finance). By adopting the q-exponential time and probability discounting models, our psycho-physical and behavioral economic experiment confirmed that nonlinear distortion of psychophysical time is a common cause of the anomalies in decision both over time and under risk (i.e., intertemporal choice and decision under risk). Implications for psychophysical neuroeconomics and econophysics are discussed.