Institutional Affiliation: Princeton University
|Measuring Time Preferences|
with Jonathan D. Cohen, Keith Marzilli Ericson, David Laibson: w22455
We review research that measures time preferences—i.e., preferences over intertemporal tradeoffs. We distinguish between studies using financial flows, which we call “money earlier or later” (MEL) decisions and studies that use time-dated consumption/effort. Under different structural models, we show how to translate what MEL experiments directly measure (required rates of return for financial flows) into a discount function over utils. We summarize empirical regularities found in MEL studies and the predictive power of those studies. We explain why MEL choices are driven in part by some factors that are distinct from underlying time preferences.
Published: Jonathan Cohen & Keith Marzilli Ericson & David Laibson & John Myles White, 2020. "Measuring Time Preferences," Journal of Economic Literature, vol 58(2), pages 299-347. citation courtesy of
|Money Earlier or Later? Simple Heuristics Explain Intertemporal Choices Better than Delay Discounting|
with Keith M. Ericson, David Laibson, Jonathan D. Cohen: w20948
Heuristic models have been proposed for many domains of choice. We compare heuristic models of intertemporal choice, which can account for many of the known intertemporal choice anomalies, to discounting models. We conduct an out-of-sample, cross-validated comparison of intertemporal choice models. Heuristic models outperform traditional utility discounting models, including models of exponential and hyperbolic discounting. The best performing models predict choices by using a weighted average of absolute differences and relative (percentage) differences of the attributes of the goods in a choice set. We conclude that heuristic models explain time-money tradeoff choices in experiments better than utility discounting models.
Published: Money Earlier or Later? Simple Heuristics Explain Intertemporal Choices Better Than Delay Discounting Does Keith M. Marzilli Ericson, , John Myles White, David Laibson, , Jonathan D. Cohen, Psychological Science Vol 26, Issue 6, pp. 826 - 833 First Published April 24, 2015 https://doi.org/10.1177/0956797615572232