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

Research output: Contribution to journalArticle

42 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)826-833
Number of pages8
JournalPsychological Science
Volume26
Issue number6
DOIs
StatePublished - Jun 6 2015

All Science Journal Classification (ASJC) codes

  • Psychology(all)

Keywords

  • decision making
  • delay of gratification
  • heuristics
  • judgment
  • open data

Fingerprint Dive into the research topics of 'Money Earlier or Later? Simple Heuristics Explain Intertemporal Choices Better Than Delay Discounting Does'. Together they form a unique fingerprint.

  • Cite this