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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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One of the key anomalies of the intertemporal choice literature is the concept of preference reversals. Indeed, in our view, the unifying theme of the (behavioral) intertemporal choice literature is the concept of preference-focused preferences (introduced in Section 2), which boils down to a preference reversal.
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Apr 15, 2021 · 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.
Mar 1, 2021 · Key Takeaways. Intertemporal choice refers to decisions, such as spending habits, made in the near-term that can affect future financial opportunities. Theoretically, by not consuming today,...
Oct 31, 2022 · Intertemporal choice reflects value comparison rather than self-control: insights from confidence judgements. Adam Bulley. , Karolina M. Lempert†. , Colin Conwell. , Muireann Irish. and. Daniel L. Schacter. Published: 31 October 2022 https://doi.org/10.1098/rstb.2021.0338. Abstract.
