Multi-attribute heuristics and intertemporal choices

Fabian Herweg and Philipp Weinschenk

Journal of Economic Behavior & Organization, 2022, vol. 200, issue C, 174-181

Abstract: We consider the intertemporal trade-off between obtaining a small amount soon or a large one later. To solve this trade-off, we propose a general model of a multi-attribute heuristic that is rooted in exponential discounting and contains several models discussed in the literature as special cases. First, we derive the necessary and sufficient conditions for time-consistent behavior. Second, we show that level effects lead to behavior as if discounting hyperbolically. Finally, we show that the imputed discount factors – based on the presumption of exponential discounting – can over- as well as underestimate the true discount rate.

Keywords: Hyperbolic discounting; Multi-attribute heuristic; Time preferences (search for similar items in EconPapers)
JEL-codes: D15 D91 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:200:y:2022:i:c:p:174-181

DOI: 10.1016/j.jebo.2022.05.019

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