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 · 2015 · Volume 26 · Issue 6
Abstract
Heuristic models have been proposed for many domains involving choice. We conducted an out-of-sample, cross-validated comparison of heuristic models of intertemporal choice (which can account for many of the known intertemporal choice anomalies) and discounting models. Heuristic models outperformed traditional utility-discounting models, including models of exponential and hyperbolic discounting. The best-performing models predicted choices by using a weighted average of absolute differences and relative percentage differences of the attributes of the goods in a choice set. We concluded that heuristic models explain time-money trade-off choices in experiments better than do utility-discounting models.
Keywords
delay of gratification, decision making, heuristics, judgment, open data
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