Explaining More While Assuming Less: An Inquiry Into Decision Making With Deferred Consequences.

What is it about?

Intertemporal choices are those in which the outcomes of available options are distributed over time. Such choices range from deceivingly simple (for example, if you are a debtor, whether you prefer to clear a debt sooner or later) to patently complex (for example, in your role as consumer, how you plan your consumption of goods, and payments for those goods, over time). We show how our understanding of those choices can be substantially improved, in scope and simplicity, by invoking the existence of time bias, which makes people willing to pay, or wanting to receive, a fixed amount of money for deferring exchanges of money and goods.

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Photo by Artem Kniaz on Unsplash

Photo by Artem Kniaz on Unsplash

Why is it important?

Theories of intertemporal choice have become very diverse in the general approach they take, and very fragmented in the explanations they offer for specific empirical findings, with no theory being able to accommodate all evidence available at this point. In a qualitative analysis, we develop a theory that is able to offer a comprehensive and parsimonious explanation of all available evidence. This is important progress in and of itself, but it also a strong promise of achieving a truly generalizable description of intertemporal choice in quantitative analyses.

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