Theory and Decision 69 (3):327-354 (2010)

We formulate and investigate experimentally a model of how individuals choose between time sequences of monetary outcomes. The model assumes that a decision maker uses, sequentially, two criteria to screen options. Each criterion only permits a decision between some pairs of options, while the other options are incomparable according to that criterion. When the first criterion is not decisive, the decision maker resorts to the second criterion to select an alternative. We find that: (1) traditional economic models based on discounting alone cannot explain a significant (almost 30%) proportion of the data no matter how much variability in the discount functions is allowed; (2) our model, despite considering only a specific (exponential) form of discounting, can explain the data much better solely thanks to the use of the secondary criterion; (3) our model explains certain specific patterns in the choices of the “irrational” people. We reject the hypothesis that anomalous behavior is due simply to random “mistakes” around the basic predictions of discounting theories: deviations are not random and there are clear systematic patterns of association between “irrational” choices
Keywords Time preference  Time sequences  Negative discounting
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DOI 10.1007/s11238-010-9214-7
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References found in this work BETA

Intransitivity of Preferences.Amos Tversky - 1969 - Psychological Review 76 (1):31-48.
Preferences for Sequences of Outcomes.George F. Loewenstein & Dražen Prelec - 1993 - Psychological Review 100 (1):91-108.

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Cumulative Weighing of Time in Intertemporal Tradeoffs.Marc Scholten, Daniel Read & Adam Sanborn - 2016 - Journal of Experimental Psychology: General 145 (9):1177-1205.

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