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A Vague Theory of Choice over Time

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Author Info
Manzini, Paola () (Queen Mary, University of London and IZA Bonn)
Mariotti, Marco (Queen Mary, University of London)

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Abstract

We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly ‘blurred’ as the events are pushed further in time. We axiomatise a class of preference representations which can be specialised to rationalise ‘anomalies’ such as preference reversals and cyclical preferences. We also present an application to a form of time inconsistency which we dub ‘the now or never fallacy’.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1228.

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Length: 29 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1228

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Related research
Keywords: time preferences; hyperbolic discounting; preference reversal; cycles; intransitive preferences;

Other versions of this item:

Find related papers by JEL classification:
A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Fishburn, Peter C & Rubinstein, Ariel, 1982. "Time Preference," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 677-94, October. [Downloadable!] (restricted)
  2. Read, Daniel, 2001. " Is Time-Discounting Hyperbolic or Subadditive?," Journal of Risk and Uncertainty, Springer, vol. 23(1), pages 5-32, July. [Downloadable!] (restricted)
  3. Ariel Rubinstein, 2000. "Is It 'Economics and Psychology?' : The Case of Hyperbolic Discounting," Levine's Bibliography 7640, UCLA Department of Economics. [Downloadable!]
    Other versions:
  4. Gilboa, Itzhak & Lapson, Robert, 1995. "Aggregation of Semiorders: Intransitive Indifference Makes a Difference," Economic Theory, Springer, vol. 5(1), pages 109-26, January.
    Other versions:
  5. Carrillo, Juan D & Mariotti, Thomas, 2000. "Strategic Ignorance as a Self-Disciplining Device," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 529-44, July.
  6. Rubinstein, Ariel, 2001. "A theorist's view of experiments," European Economic Review, Elsevier, vol. 45(4-6), pages 615-628, May. [Downloadable!] (restricted)
  7. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279. [Downloadable!] (restricted)
  8. Ted O' Donoghue & Matthew Rabin, 2001. "Choice and Procrastination," Microeconomics 0012002, EconWPA. [Downloadable!]
  9. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
  10. Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May. [Downloadable!] (restricted)
  11. Efe A Ok & Yusufcan Masatlioglu, 2003. "A General Theory of Time Preferences," Levine's Bibliography 234936000000000089, UCLA Department of Economics. [Downloadable!]
  12. Ted O'Donoghue & Matthew Rabin, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March. [Downloadable!] (restricted)
  13. JosÊ RamÕn Uriarte, 1999. "Decision-making under risk: Editing procedures based on correlated similarities, and preference overdetermination," Review of Economic Design, Springer, vol. 4(1), pages 1-12. [Downloadable!] (restricted)
  14. Philippe Jehiel & Andrew Lilico, 2006. "Smoking today or stopping tomorrow: A limited foresight perspective," Levine's Bibliography 506439000000000198, UCLA Department of Economics. [Downloadable!]
  15. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April. [Downloadable!] (restricted)
    Other versions:
  16. Aizpurua, J M, et al, 1993. " Similarity and Preferences in the Space of Simple Lotteries," Journal of Risk and Uncertainty, Springer, vol. 6(3), pages 289-97, June.
  17. Ted O'Donoghue & Matthew Rabin, 2001. "Choice And Procrastination," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 121-160, February. [Downloadable!] (restricted)
  18. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November. [Downloadable!] (restricted)
    Other versions:
  19. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-17, March. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Efe A Ok & Yusufcan Masatlioglu, 2003. "A General Theory of Time Preferences," Levine's Bibliography 234936000000000089, UCLA Department of Economics. [Downloadable!]
  2. Svetlana Boyarchenko & Sergei Levendorskii, 2005. "Discount factors ex post and ex ante, and discounted utility anomalies," Microeconomics 0510013, EconWPA, revised 17 Nov 2005. [Downloadable!]
  3. Ali al-Nowaihi & Sanjit Dhami, 2007. "Explaining the anomalies of the exponential discounted utility model," Discussion Papers in Economics 07/09, Department of Economics, University of Leicester. [Downloadable!]
  4. Paola Manzini & Marco Mariotti, 2004. "Rationalizing Boundedly Rational Choice," Microeconomics 0407005, EconWPA, revised 21 Jul 2005. [Downloadable!]
  5. Manzini, Paola & Mariotti, Marco, 2004. "Rationalizing Boundedly Rational Choice: Sequential Rationalizability and Rational Shortlist Methods," IZA Discussion Papers 1239, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Paola Manzini & Marco Mariotti, 2007. "Choice Over Time," IZA Discussion Papers 2993, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
    • Paola Manzini & Marco Mariotti, 2007. "Choice over Time," Working Papers 605, Queen Mary, University of London, Department of Economics. [Downloadable!]
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