Abstract
Intertemporal choices are decisions with consequences that play out over time. These choices range from the prosaic--how much food to eat at a meal--to life-changing decisions about education, marriage, fertility, health behaviors and savings. Intertemporal preferences also affect policy debates about long-run challenges, such as global warming. Historically, it was assumed that delayed rewards were discounted at a constant rate over time. Recent theoretical and empirical advances from economic, psychological and neuroscience perspectives, however, have revealed a more complex account of how individuals make intertemporal decisions. We review and integrate these advances. We emphasize three different, occasionally competing, mechanisms that are implemented in the brain: representation, anticipation and self-control.
Highlights
Economists have responded to these findings by and empirical advances from economic, psychological and constructing new models of intertemporal choice, which neuroscience perspectives, have revealed a more incorporate psychological insights, to explain otherwise complex account of how individuals make intertemporal anomalous patterns of economic behavior [13]
Anticipation produce127 s immediate hedonic consequences, even when the anticipated consumption event is delayed in time
Any comprehensive account of intertemporal choice should incorporate all of these mechanisms
Summary
Time discounting posed the first serious challenge to the Intertemporal choices are decisions with consequences that. DU model – to the assumption that people play out over time These choices range from the prosaic – discount the future exponentially [2,3]. Intertemporal choices – decisions with consequences that inform economic modeling and to provide new clues about play out over time – are important and ubiquitous. productive empirical and theoretical avenues for future. The main contribution of economics to the study of intertemporal decisions was modeling. Policy decisions about how much to spend on research and development, health and education all depend on the discount rate used to analyze the decision. The main contribution of psychology has been to identify, through empirical research, psychological mechanisms underlying intertemporal choice. George Ainslie’s research on the structure of
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