Time, money and compromise effect: the mediating role of temporal proximity and time orientation

The time-money relationship is receiving increasing attention in decision making literature. Time has a value measured by its opportunity cost (Becker, 1965) and can be saved, spent and allocated among competing activities. The value of time is not constant, but depends on contextual characteristics, while money has a more stable value (Leclerc, Schmitt & Dubè, 1995). According to Soman (2001), the sunk cost effect is not observed for past investment of time, but it is more typical when investments are expressed in money. Along the same lines, Okada and Hoch (2004) find a difference in the way consumers spend time and money: it is more difficult to evaluate the value of time than the value of money. The aim of this research is to shed some additional light on the time-money relationship in presence of a heuristically solvable choice task. Our primary goal is to analyze the time-money relationship when money can not any longer be regarded as a fungible resource. More specifically, we aim to analyze consumers’ tendency to use a compromise heuristic (Simonson, 1989) when money becomes a not fungible resource and its values expires in the near future. Interestingly, literature on time-money relationship disregards to analyze individuals time orientation in the evaluation of temporal and monetary attributes. We believe that consumers with a structured vs. unstructured time orientation can evaluate differently the importance associated to both time and money related characteristics: consequently they may exhibit different patterns in the use of choice heuristics.