The Hidden-Zero Effect

Splurge on a vacation, or save for retirement? Sleep in late, or get up to exercise? The ability to resist a tempting, immediately available reward in order to obtain a larger delayed reward is the hallmark of self-control, and predicts important life outcomes such as academic achievement (Duckworth & Seligman, 2005) and social adjustment (Mischel & Ayduk, 2004). Unfortunately, immediate rewards are often difficult to resist. One key factor that makes them so appealing is temporal discounting – the tendency to consider events as less important if they occur in the distant future, rather than in the near future (Ainslie, 2001). This tendency tempts us to a choose small immediate reward over a larger delayed reward, simply because the first is immediately available – a choice that can greatly sabotage the attainment of our long-term goals. To study temporal discounting, researchers (e.g. Estle, Green, Myerson, & Holt, 2007) typically have participants choose between smaller-sooner rewards and larger-later rewards (e.g., “Would you prefer [A] $5 today, OR [B] $6.20 in 26 days?”). Decision-makers commonly view such situations as a choice between a good alternative soon and a better alternative later. However, what is not mentioned explicitly in such situations is the fact that choosing to receive one alternative also means choosing not to receive the other. In other words, decision-makers are implicitly encouraged to choose between one-shot events, rather than between sequences of events, in which choosing an immediate reward also means choosing to receive nothing later, and vice versa (e.g., “Would you prefer [A] $5 today and $0 in 26 days, OR [B] $0 today and $6.20 in 26 days?”). People’s choices are heavily influenced by ways in which the alternatives are framed, even when the different frames are logically equivalent (Tversky & Kahneman, 1981). Given that people prefer sequences that improve over time (Ariely & Zauberman, 2003; Frederick, Loewenstein, & O'Donoghue, 2002), we hypothesized that representing each alternative as a sequence of outcomes, by explicitly referring to the hidden zero in each alternative, would increase participants’ willingness to choose larger delayed rewards over smaller immediate rewards, as they would prefer to choose sequences that appear to improve over time.