The choices individuals make with respect to intertemporal rewards are not always logical.  If offered a choice between, say, $10 today and $20 today, most people would choose $20. But if the choice is between $10 today and $20 a year from now, many would take the immediate $10.  Psychologists assume that by choosing the immediate lesser amount, the individual “discounts” the $20 reward on the basis of its delayed receipt.  This is termed  delayed discounting; i.e., discounting delayed rewards, or sometimes temporal discounting.

A number of theories of delay discounting have been proposed.  Samuelson’s 1937 theory provides a mechanism for comparing choices made by an individual on the assumption that they will be consistent in their choices (Scholten & Read, 2010)

Laibson’s 1997 quasi-hyperbolic model, choices are perceived equally only if both outcomes are delayed (i.e., $1 next week or $2 in two weeks), but not if the smaller choice is available immediately (i.e., $1 now  or $2 next week).  This bias for immediate rewards is referred to as the immediate-bias effect (Scholten & Read, 2010).

Lowenstein and Prelec’s  1992 proposed hyperbolic discounting model changed the paradigm from  exponential discounts and instead moved to the perceived hyperbolic values between the two choices in which the sooner the near-term reward is, the greater the discount of the later reward (Scholten & Read, 2010).  Their model had a variety of features including reference dependence (outcomes are assessed in terms of a neutral point rather than relative to  each  other); a delay-speedup asymmetry, in which positive results are discounted more when delayed than negative one is discounted under the same circumstances (Scholten & Read, 2010).

The hyperbolic function for delay discounting explains why there is a reversal from making the ‘smaller sooner’ option over the ‘larger later’ choice, as actually occurs in studies (Green & Myerson 2004). Research also has demonstrated that this hyperbolic approach in which small changes in the delays of the options can produce different amounts of discounting and even reverse the options chosen; in the exponential model of delay discounting, this cannot happen (Murphy, Vuchinich & Simpson, 2001).

Other research has looked at the discount between two delayed rewards rather than one immediate and one delayed, with one reward being smaller and sooner and the other being larger and more delayed. This work confirmed that the hyperbolic function model works for the situation where both rewards are delayed but by different time periods (Green, Myerson & Macaux, 2005).

A more recent model, Scholten & Read’s interval discounting model of 2006 asserts that discounting occurs not only as a result  of the delay, but also as a result of the size of the interval between the two choices. Such delays can either result in more or less total discounting (Scholten & Read, 2010).

Delay discounting is also often correlated with impulsivity in both animals and people with people ranked as more impulsive also being those who are likely to discount future rewards more. In such cases, immediate rewards are generally strongly preferred over larger rewards later (Ostraszewski & Karzel, 2002).

Delay discounting is also associated with addictive behaviors such as the use of cigarettes, drugs, or alcohol.  For example, one study of individuals in a drug rehab program rewarded participants for every drug-free blood or urine test they had. Those rewards could either be redeemed immediately or accumulated for later reward. Participants who originally tested as higher in impulsivity tended to immediately redeem those rewards rather than letting the awards accumulate (Bickel, Jones, Landes, Christensen, Jackson & Mancino, 2010). In addition, a study of alcohol use and delay discounting in regular heavy drinkers noted that discounting was closely associated with intensity of demand for alcohol (MacKillop et al., 2010).

A second study of smokers which tested both impulsivity and measured delay discounting noted a significant positive correlation between the delay discounting of financial rewards and the number of cigarettes smoked per day (and estimated nicotine dosage) (Ohmura, Takahashi & Kitamura, 2005).  Addiction may in fact be a phenomenon of a short-term temporal horizon, with addicts tending to discount future behavior and rewards more than non-addicted control groups (Bickel, Kowal, & Gatchalian, 2006).

Even Internet addiction among college students has proven to correlate positively toward a tendency for delay discounting, revealing a higher level of impulsivity and other addictive behavioural characteristics (Saville, Gisbert, Kopp, & Telesco, 2010).

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