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What is an intertemporal choice model?
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For much of the twentieth century, the working model of intertemporal choice was the (exponential) discounted utility model developed by Ramsey (1928) and Samuelson (1937), which features time-separable utility flows that are exponentially discounted: i.e., utility flows
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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".
Aug 17, 2021 · The very first formalization of an intertemporal choice model is due to Ramsey and Samuelson . The model features time-separable utility flows exponentially discounted and included the so called exponential discount function, where the discount rate is constant and independent of the time-frame.
- Marco Lafratta
- marco.lafratta@studenti.unich.it
- 2020
The very first formalization of an intertemporal choice model is due to Ramsey [1] and Samuel-son [2]. The model features time-separable utility flows exponentially discounted and included the so called exponential discount function, where the discount rate is constant and independent of the time-frame.
24 terms of dates – for example, x today or y on a particular 84. 25 date – than when expressed in terms of a delay interval – 85. 26 for example, x today or y after a wait of z days (where the 86. 27 interval in the two choices is equal) [87]. 87. 28 Given the complexities of many decisions, people often 88.
Much of this research has focused on the nature of the time discount function, with particular attention to those factors that promote impulsiveness versus an enhanced ability to delay gratification. Section 7.1 presents some of the elementary economic concepts of intertemporal choice. We compare the “standard” choice model employed in the ...
Normative intertemporal choice models divide into two approaches. The first approach accepts discounting as a valid normative construct, using re-vealed preference as a guiding principle. The second approach asserts that discounting is a normative mistake (except for a minor adjustment for mor-tality discounting).
