Date of Original Version
Abstract or Description
Research on decision making under uncertainty has been strongly influenced by the documentation of numerous expected utility (EU) anomalies-behaviors that violate the expected utility axioms. The relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence ofan analogous set of discounted utility (DU) anomalies. We enumerate a set of DU anomalies analogous to the EU anomalies and propose a model that accounts for the anomalies, as well as other intertemporal choice phenomena incompatible with DU. We discuss implications for savings behavior, estimation of discount rates, and choice framing effects.
Quarterly Journal of Economics, 107, 2, 573-597.