Working Paper: NBER ID: w25358
Authors: Keith Marzilli Ericson; David Laibson
Abstract: Intertemporal tradeoffs play a key role in many personal decisions and policy questions. We describe models of intertemporal choice, identify empirical regularities in choice, and pose new questions for research. The focus for intertemporal choice research is no longer whether the exponential discounted utility model is empirically accurate, but, instead, what models best explain the robust behavioral deviations we observe. We introduce the term “present-focused preferences” to describe the large class of models that prioritize present flows of experienced utility. Present-focused preferences need not coincide with a preference for commitment or dynamically inconsistent preferences. Present-bias is a special case of present-focused preferences.
Keywords: intertemporal choice; present-focused preferences; behavioral economics; discounting; preference reversals
JEL Codes: C90; D14; D15; D60; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| present-focused preferences (D91) | dynamically inconsistent choices (D91) |
| present-focused preferences (D91) | immediate gratification (D15) |
| psychological factors (D91) | high required rates of return for money (E49) |
| temporal context (C41) | choice behavior (D01) |
| present bias (D15) | procrastination (D29) |