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The psychology of intertemporal tradeoffs
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Scholten, Marc and Read, Daniel. (2010) The psychology of intertemporal tradeoffs. Psychological Review, Vol.117 (No.3). pp. 925-944. ISSN 0033-295X
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Official URL: http://dx.doi.org/10.1037/a0019619
Abstract
It is commonly assumed that people make intertemporal choices by “discounting” the value of delayed outcomes, assigning discounted values independently to all options, and comparing the discounted values. We identify a class of anomalies to this assumption of alternative-based discounting, which collectively shows that options are not treated independently but rather comparatively: The time difference, or interval, between the options sometimes counts more and sometimes counts less if it is taken as a whole than if it is divided into shorter subintervals ( superadditivity and subadditivity, respectively), and whether the interval counts more or less depends on the money difference, or compensation, involved ( inseparability). We develop a model that replaces alternative-based discounting with attribute-based tradeoffs. In our model, people make intertemporal choices by weighing how much more they will receive or pay if they wait longer against how much longer the wait will be, or, conversely, how much less they will receive or pay if they do not wait longer against how much shorter the wait will be. This model, called the tradeoff model, accommodates, in a psychologically plausible way, all anomalies that the discounting approach can and cannot address. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
| Item Type: | Journal Article | ||||
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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| Journal or Publication Title: | Psychological Review | ||||
| Publisher: | American Psychological Association | ||||
| ISSN: | 0033-295X | ||||
| Official Date: | 2010 | ||||
| Dates: |
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| Volume: | Vol.117 | ||||
| Number: | No.3 | ||||
| Page Range: | pp. 925-944 | ||||
| Identification Number: | 10.1037/a0019619 | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Restricted or Subscription Access | ||||
| URI: | http://wrap.warwick.ac.uk/id/eprint/47774 |
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