Money earlier or later? Simple heuristics explain intertemporal choices better than delay discounting does.

ABSTRACT: Heuristic models have been proposed for many domains involving choice. We conducted an out-of-sample, cross-validated comparison of heuristic models of intertemporal choice (which can account for many of the known intertemporal choice anomalies) and discounting models. Heuristic models outperformed traditional utility-discounting models, including models of exponential and hyperbolic discounting. The best-performing models predicted choices by using a weighted average of absolute differences and relative percentage differences of the attributes of the goods in a choice set. We concluded that heuristic models explain time-money trade-off choices in experiments better than do utility-discounting models.

SUBMITTER: Ericson KM 

PROVIDER: S-EPMC4516222 | biostudies-literature | 2015 Jun

REPOSITORIES: biostudies-literature