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Positive-framed and negative-framed messages were delivered to examine the effect of framing on intertemporal decisions through lab experiments while holding the level of financial literacy constant. The three big questions adopted by Lusardi and Mitchell were utilized to assess the financial literacy of our subjects before they were asked to complete 20 incentivized intertemporal decisions. A small, delayed reward and a slightly bigger one were incorporated into the intertemporal decisions with a delay of 30 days. The ordinary least square (OLS) shows that the negative relationship between financial literacy and discount rates was held when the delayed reward was small. Interestingly, when the delayed reward became slightly bigger, their discount rates were reduced significantly with the negatively framed message. These findings suggest that the negatively framed message can motivate individuals to save for a greater return in the real world. Lastly, subjects with the highest level of financial literacy were not responsive to the magnitude effect, proving that a financial literacy program is essential to strengthen the individual's financial plan and reduce their discount rates in the developing country context.

The 2008–2009 financial crisis has renewed concerns about managerial short-termism and its negative effects. Based on intertemporal choice theory, this chapter aims to identify the role that performance measurement and compensation systems can play in orienting managers toward building long-term performance potential in addition to achieving short-term results.

The findings suggest that certain types of measures used – in particular broader, more inclusive financial indicators, risk-adjusted measures, and key nonfinancial value drivers – as well as the timing of measurement and payment of rewards can lead to reduced time discounting and a lower devaluation of the future, and consequently to a prioritized managerial attention focus on long-term company goals.

This chapter contributes to a better understanding of the institutional determinants of managerial long-term orientation and the influence of organizational systems on goal prioritization in managerial intertemporal choice processes.

The findings have practical relevance for the design of incentive systems that aim to place an emphasis on ensuring long-term value creation.

Systems that guide managerial behavior toward the long term can help to increase economic and societal sustainability.

Despite the emergence of more integrated performance measurement approaches, time horizon has not been in the main focus of research in the field yet. This review provides a first structured overview of the temporal effects of different elements of performance measurement and compensation systems.