Where Does My Time Go?! The Trap of Segregated Time

Abstract

According to the arithmetic rules of mental accounting (ARMAs), given multiple gains, people tend to prefer them to be segregated, whereas for multiple losses, people tend to prefer them to be aggregated (Thaler 1985). This project hypothesized that people's value function of time follows the ARMAs, such that they would prefer segregated time-gains and aggregated time-losses. In addition to hedonic editing, this project also examined the endowment effect using time as the object. We hypothesized that people's value of time would follow the endowment effect such that they would have a higher willingness to accept (WTA) for time losses than their willingness to pay (WTP) for time gains. Through four online studies, we found that people place more value on aggregated time-gains and require less compensation for segregated time-losses, and expect higher compensation for time lost than payment for the same amount of time gained. Thus, we rejected the first hypothesis, though accepted the second, as people's value of time contradicts the ARMAs while following the endowment effect.