Choice Over Time
Publication Year: 1992
Published by: Russell Sage Foundation
Title Page, Copyright Page
Daily life requires frequent trade-offs between costs and benefits that occur at different points in time. To sleep late or rise early, munch snacks or eat a healthy lunch, buy the snazzy sports car or the reliable sedan, get a job or go to college, risk pregnancy or use a contraceptive- these...
Part 1. Historical Overview
1. The Fall and Rise of Psychological Explanations in the Economics of Intertemporal Choice
In recent years, despite lingering skepticism, the influence of psychology on economics has steadily expanded. Challenged by the discovery of individual and market level phenomena that contradict fundamental economic assumptions, and impressed by theoretical...
2. Intertemporal Choice and Political Thought
Most work on intertemporal choice has been done within philosophy, psychology, and economics. Much of it is surveyed elsewhere in this book. In this chapter I discuss how issues of myopia, deferred gratification, and self-control have been discussed within...
Part 2. General Perspectives
3. Hyperbolic Discounting
Of the many striking psychiatric syndromes known to man, the most dramatic is the multiple, or split, personality. Unrelated to coincidentally named schizophrenia, the ego-splitting of multiplepersonality disorder confronts its sufferers with sudden shifts of values...
4. Irrationality, Impulsiveness, and Selfishness as Discount Reversal Effects
Imagine two rewards, one clearly preferable to the other-for instance, a large candy bar versus a small candy bar-offered to a child. As long as the large and small candy bars are offered at the same time, the child prefers the large one. Imagine that the preferred reward was not available until tomorrow. The child may well prefer...
5. Anomalies in Intertemporal Choice: Evidence and an Interpretation
Since its introduction by Samuelson in 1937, the discounted utility model (DU) has dominated economic analyses of intertemporal choice. In its most restrictive form, the model states that a sequence of consumption levels...
6. Delay in Gratification in Children
For almost a century the infant has been characterized as impulse-driven, pressing for tension reduction, unable to delay gratification, oblivious to reason and reality, and ruled entirely by a pleasure principle that demands immediate satisfaction (Freud, 1959)...
Part 3. Self-Control
7. Self-Command: A New Discipline
In a cocaine addiction center in Denver, patients are offered an opportunity to submit to extortion. They may write a self-incriminating letter, preferably a letter confessing their drug addiction, deposit the letter with the clinic, and submit to a randomized...
Chapter 3 presents evidence that a person does not "have" a preference, in the sense of a disposition to choose that is stable unless acted upon. Viewed over even short periods of time, he is a population of successive preferences. We argue in that chapter that successively...
Part 4. Internalities
9. Utility from Memory and Anticipation
Although not a central focus of economics, the idea that people derive pleasure and pain from other people's experiences is widely accepted by economists. Duesenberry's "relative income hypothesis,"1 Leibenstein's "bandwagon, snob and Veblen effects,"2 Robert...
Economic theory assumes that people's choices are efficient, in the sense that they can be interpreted as, flowing from constrained maximization of a well-defined objective function. However, a growing body of evidence from both human and animal choice experiments points to...
11. The Role of Moral Sentiments in the Theory of Intertemporal Choice
The standard neoclassical theory of intertemporal choice begins with the assumption that people are rational, which means that they act as if trying to maximize a discounted flow of utility. At least two types of rationality are distinguished according to the types of motives...
Part 5. Applications and Extensions
12. Mental Accounting, Saving, and Self-Control
Modigliani and Brumberg's life-cycle theory of saving (1954) (and the similar permanent income hypothesis by Milton Friedman ) is a classic example of economic theorizing. The life-cycle (LC) model makes some simplifying assumptions in order to be able to...
13. A Theory of Addiction
The complexity of addiction is mirrored in the many disciplines that study it. The chemistry of addictive substances falls in the domain of biochemistry, tolerance and withdrawal belong to physiology; various personality or hereditary predispositions, and the role of...
14. Rational Addiction and the Effect of Price on Consumption
Legalization of such substances as marijuana, heroin, and cocaine surely will reduce the prices of these harmful addictive drugs. By the law of the downward-sloping demand function, their consumption will rise, but by how much? According to conventional...
15. Frames of Reference and the Intertemporal Wage Profile
In this chapter, I argue that context has important implications for intertemporal consumption allocations, and for the design of the economic institutions that help support these allocations. More specifically, I will argue that intrapersonal consumption comparisons...
Publication Year: 1992
OCLC Number: 835514025
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