A Vague Theory of Choice Over Time

29 Pages Posted: 2 Aug 2004

See all articles by Paola Manzini

Paola Manzini

University of St. Andrews - School of Economics and Finance; Institute for the Study of Labor (IZA)

Marco Mariotti

University of Exeter Business School - Department of Economics

Date Written: July 2004

Abstract

We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly "blurred" as the events are pushed further in time. We axiomatise a class of preference representations which can be specialised to rationalise "anomalies" such as preference reversals and cyclical preferences. We also present an application to a form of time inconsistency which we dub "the now or never fallacy".

Keywords: Time preferences, hyperbolic discounting, preference reversal

JEL Classification: A12, C70, D90

Suggested Citation

Manzini, Paola and Mariotti, Marco, A Vague Theory of Choice Over Time (July 2004). IZA Discussion Paper No. 1228. Available at SSRN: https://ssrn.com/abstract=317059

Paola Manzini (Contact Author)

University of St. Andrews - School of Economics and Finance ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

HOME PAGE: http://www.st-andrews.ac.uk/~pm210/

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Marco Mariotti

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Rennes Drive
Exeter EX4 4RJ
United Kingdom
+01392 263219 (Phone)
+01392 263242 (Fax)

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