diff --git a/concurrency-limits-core/src/main/java/com/netflix/concurrency/limits/limit/AIMDLimit.java b/concurrency-limits-core/src/main/java/com/netflix/concurrency/limits/limit/AIMDLimit.java
index 1884e835..1addef4c 100644
--- a/concurrency-limits-core/src/main/java/com/netflix/concurrency/limits/limit/AIMDLimit.java
+++ b/concurrency-limits-core/src/main/java/com/netflix/concurrency/limits/limit/AIMDLimit.java
@@ -16,26 +16,44 @@
 package com.netflix.concurrency.limits.limit;
 
 import com.netflix.concurrency.limits.Limit;
+import com.netflix.concurrency.limits.internal.Preconditions;
+
+import java.util.concurrent.TimeUnit;
 
 /**
  * Loss based dynamic {@link Limit} that does an additive increment as long as 
  * there are no errors and a multiplicative decrement when there is an error.
  */
 public final class AIMDLimit extends AbstractLimit {
-    
+    private static final long DEFAULT_TIMEOUT = TimeUnit.SECONDS.toNanos(5);
+
     public static class Builder {
         private int initialLimit = 10;
         private double backoffRatio = 0.9;
-        
+        private long timeout = DEFAULT_TIMEOUT;
+
         public Builder initialLimit(int initialLimit) {
             this.initialLimit = initialLimit;
             return this;
         }
-        
+
         public Builder backoffRatio(double backoffRatio) {
+            Preconditions.checkArgument(backoffRatio < 1.0 && backoffRatio >= 0.5, "Backoff ratio must be in the range [0.5, 1.0)");
             this.backoffRatio = backoffRatio;
             return this;
         }
+
+        /**
+         * Timeout threshold that when exceeded equates to a drop.
+         * @param timeout
+         * @param units
+         * @return Chainable builder
+         */
+        public Builder timeout(long timeout, TimeUnit units) {
+            Preconditions.checkArgument(timeout > 0, "Timeout must be positive");
+            this.timeout = units.toNanos(timeout);
+            return this;
+        }
         
         public AIMDLimit build() {
             return new AIMDLimit(this);
@@ -47,20 +65,24 @@ public static Builder newBuilder() {
     }
     
     private final double backoffRatio;
+    private final long timeout;
 
     private AIMDLimit(Builder builder) {
         super(builder.initialLimit);
         this.backoffRatio = builder.backoffRatio;
+        this.timeout = builder.timeout;
     }
     
     @Override
     protected int _update(long startTime, long rtt, int inflight, boolean didDrop) {
-        if (didDrop) {
-            return Math.max(1, Math.min(getLimit() - 1, (int) (getLimit() * backoffRatio)));
-        } else if (inflight >= getLimit()) {
-            return getLimit() + 1;
+        final int currentLimit = getLimit();
+
+        if (didDrop || rtt > timeout) {
+            return Math.max(1, Math.min(currentLimit - 1, (int) (currentLimit * backoffRatio)));
+        } else if (inflight * 2 >= currentLimit) {
+            return currentLimit + 1;
         } else {
-            return getLimit();
+            return currentLimit;
         }
     }