When one very short empty time interval follows right after another, t
he second one can be underestimated considerably, but only if it is lo
nger than the first one. We coined the term ''time-shrinking'' for thi
s illusory phenomenon in our previous studies. Although we could relat
e our finding to some studies of rhythm perception, we were not able t
o explain the illusion. The present article presents our attempt to un
derstand the mechanism that causes the time-shrinking. Four experiment
s are reported. The first one ruled out the possibility that the illus
ion results from a difficulty in resolving the temporal structure. The
second experiment showed that the listener was not inadvertently judg
ing the duration of the first interval instead of that of the second o
ne. In addition, this experiment yielded more information about the ti
me window within which the illusion occurs. The third experiment showe
d that forward masking of the sound markers, delimiting the empty dura
tions, could not explain the illusion either. Furthermore, this experi
ment revealed a clue to the mechanism of time-shrinking: competition b
etween expected and observed temporal positions. The fourth experiment
further examined the temporal conditions that give rise to the illusi
on and showed that categorical perception plays a crucial role in the
formation of the illusion. In the general discussion, we argue that th
e illusion is due to an asymmetric process of temporal assimilation.