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Multi-attribute heuristics and intertemporal choices

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  • Herweg, Fabian
  • Weinschenk, Philipp

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.

Suggested Citation

  • Herweg, Fabian & Weinschenk, Philipp, 2022. "Multi-attribute heuristics and intertemporal choices," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 174-181.
    • Handle: RePEc:eee:jeborg:v:200:y:2022:i:c:p:174-181
    DOI: 10.1016/j.jebo.2022.05.019
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    More about this item

    Keywords

    Hyperbolic discounting; Multi-attribute heuristic; Time preferences;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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