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New paradoxes in intertemporal choice

Author

Listed:
  • Li-Lin Rao
  • Shu Li

Abstract

Similar to research on risky choice, the traditional analysis of intertemporal choice takes the view that an individual behaves so as to maximize the discounted sum of all future utilities. The well-known Allais paradox contradicts the fundamental postulates of maximizing the expected value or utility of a risky option. We describe a violation of the law of diminishing marginal utility as well as an intertemporal version of the Allais paradox.

Suggested Citation

  • Li-Lin Rao & Shu Li, 2011. "New paradoxes in intertemporal choice," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 6(2), pages 122-129, February.
  • Handle: RePEc:jdm:journl:v:6:y:2011:i:2:p:122-129
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    References listed on IDEAS

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    1. Carlin, Paul S., 1996. "Can the maximization principle be discarded? A comment," Journal of Economic Behavior & Organization, Elsevier, vol. 29(2), pages 351-353, March.
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    Cited by:

    1. Jonathan W. Leland & Mark Schneider, 2016. "Salience, Framing, and Decisions under Risk, Uncertainty, and Time," Working Papers 16-08, Chapman University, Economic Science Institute.
    2. repec:jdm:journl:v:12:y:2017:i:3:p:253-259 is not listed on IDEAS
    3. Lu, Yang & Wu, Dongmei & Zhuang, Xintian, 2016. "Part-whole bias in intertemporal choice: An empirical study of additive assumption," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 231-235.
    4. Bethany J. Weber & Wah Pheow Tan, 2012. "Ambiguity aversion in a delay analogue of the Ellsberg Paradox," Judgment and Decision Making, Society for Judgment and Decision Making, pages 383-389.
    5. Cheng-Ming Jiang & Feng-Pei Hu & Long-Fei Zhu, 2014. "Introducing upfront losses as well as gains decreases impatience in intertemporal choices with rewards," Judgment and Decision Making, Society for Judgment and Decision Making, pages 297-302.
    6. Jih-Jeng Huang & Masahiro Inuiguchi, 2015. "Diminishing Utility Decision Model for Weighting Criteria," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., pages 1263-1284.

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