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Intertemporal choice is the study of the relative value people assign to two or more payoffs at different points in time. This relationship is usually simplified to today and some future date. Intertemporal choice was introduced by John Rae in 1834 in the "Sociological Theory of Capital".
- Present Bias
- Temptation Models
- Dual Self Models
- Models of Psychometric Distortions
- Models of Myopia
Present bias is a special case of the more generalized concept of present-focused preferences, and it is usually referred to as quasi-hyperbolic discounting . In this intertemporal choice model, the present-biased preferences enclose a continuative payoff stream that is weighted by parameter \(\beta \), and exponentially discounted afterwards, \(\b...
As stated before, dynamically inconsistent choices can stem from dynamically consistent preferences and rational beliefs. Different models that could explain this pattern were subsequently introduced as the so called unitary self models , by incorporating temptation as a relevant variable of choice and analyzing the degree to which choice itself wa...
Another branch of present focused models is predicated upon the concept that conflicting selves simultaneously steer the decision-maker in diametrically opposed directions. Thaler and Shefrin had hypothesized conflict between a myopic “doer” and a far-sighted “planner”. A meticulous formalization of this framework was done by Fudenberg and Levine ...
Models of psychometric distortions affirm that psychic distortions skew our temporal perception and our ability to properly manage hazards. When forming our intertemporal preferences, our subjective estimations don’t match objective time accurately : subsequently, it can be hypothesized that agents’ subjective perception of time isn’t linear and is...
We could define myopia as the inability to clearly glimpse into the future when it is theoretically forecastable in nature. The most rigorous and thorough modeling of myopia dates back to Gabaix and Laibson , who argue that behavior generated from imperfect prediction is indistinguishable from the one generated by intertemporal choices. The model a...
- Marco Lafratta
- marco.lafratta@studenti.unich.it
- 2020
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In this handbook chapter, we review the latest research on intertemporal choice and identify important open questions for our understanding of human behavior. We begin (Section 2) by examining formal models of intertemporal choice, because models provide a lens with which to examine empirical evidence and help identify new questions to explore.
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Mar 1, 2021 · Intertemporal choice is an economic term describing how current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption levels could...
- Daniel Liberto
Intertemporal choice involves deciding between smaller, sooner and larger, later rewards. People tend to prefer smaller rewards that are available earlier to larger rewards available later, a phenomenon referred to as temporal or delay discounting.
Abstract. This paper reviews the existing literature on the intertem-poral choice from a methodological perspective. After a summary of the neoclassical model with its inaccuracies and controversies, the paper introduces the concept of present bias presented through time discount-ing research.
Feb 25, 2019 · Because intertemporal choices involve trade-offs between two attributes—amount and time—those attributes influence choice in opposite directions; that is, an increased decision weight on time ...
