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Beyond discounting: the tradeoff model of intertemporal choice

Scholten, Marc and Read, Daniel (2006) Beyond discounting: the tradeoff model of intertemporal choice. Operational Research working papers, LSEOR 06.88. Operational Research Group, Department of Management, London School of Economics and Political Science, London, UK. ISBN 0753020807

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Abstract

Research on intertemporal judgments and choices between a smaller-sooner and a larger-later outcome has revealed many anomalies to the discounted-utility model. Attempts to account for these anomalies within the discounting paradigm have resulted in convoluted and psychologically opaque models. We therefore develop a new model of intertemporal choice, the tradeoff model, in which choice results from a tradeoff between the perceived time difference (interval) and the perceived outcome difference (compensation). This model is both more parsimonious and more intuitive than any rival discounting model of comparable scope. Moreover, it accurately describes archival data as well as data from a new experiment.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/collections/operationalResear...
Additional Information: © 2006 The London School of Economics and Political Science
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Research centres and groups > Management Science Group
Departments > Management
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: LSEOR 06.88
Date Deposited: 13 Feb 2009 14:54
URL: http://eprints.lse.ac.uk/22710/

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