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Choice over Time

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  • Paola Manzini

    (Queen Mary, University of London)

  • Marco Mariotti

    (Queen Mary, University of London)

Abstract

In the last twenty years a growing body of experimental evidence has posed a challenge to the standard Exponential Discounting Model of choice over time. Attention has focused on some specific 'anomalies', notably preference reversal and declining discount rates, leading to the formulation of the model of hyperbolic discounting which is finding increasing favour in the literature. In this paper we provide a survey of both the theoretical modelling and the experimental evidence relating to choice over time. As we will show, a careful analysis of the mapping between theoretical models and experimental investigations raises questions as to whether some of the most focused upon anomalies should be indeed classified as such, or whether they are really the most challenging ones for conventional theory. New developments are emerging both at the theoretical and empirical level, opening up new exciting avenues for investigation.

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Bibliographic Info

Paper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 605.

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Date of creation: Sep 2007
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Handle: RePEc:qmw:qmwecw:wp605

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Keywords: Time preference; Choice over time; Theory; Experiments;

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Cited by:
  1. Paola Manzini & Marco Mariotti & Luigi Mittone, 2006. "Choosing Monetary Sequences: Theory and Experimental Evidence," Working Papers 562, Queen Mary, University of London, School of Economics and Finance.
  2. Bruderer Enzler, Heidi & Diekmann, Andreas & Meyer, Reto, 2014. "Subjective discount rates in the general population and their predictive power for energy saving behavior," Energy Policy, Elsevier, vol. 65(C), pages 524-540.
  3. Stefania Albanesi & Claudia Olivetti, 2007. "Gender Roles and Technological Progress," Discussion Papers 0607-12, Columbia University, Department of Economics.
  4. Andreas Oehler & Christina Werner, 2008. "Saving for Retirement—A Case for Financial Education in Germany and UK? An Economic Perspective," Journal of Consumer Policy, Springer, vol. 31(3), pages 253-283, September.
  5. Grignon, Michel, 2009. "An empirical investigation of heterogeneity in time preferences and smoking behaviors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 739-751, October.
  6. Jawwad Noor, 2007. "Hyperbolic Discounting and the Standard," Levine's Bibliography 321307000000000939, UCLA Department of Economics.
  7. Conrad Heilmann, 2008. "A representation of time discounting," LSE Research Online Documents on Economics 23858, London School of Economics and Political Science, LSE Library.

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