Y1 - Int. to Behavioural Economics

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Week 3

Erasmus Universiteit · Int. Economics and Business Economics

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Decision Process over Time
Discounted Utility (DU)
Implied Preference for Immediate Gratification
Impatience and Discounted Utility
Example
Reasons for Impatience
Constant Impatience
Decreasing Impatience
Time Consistency
Exponential Discounting
Quasi-Hyperbolic Discounting
Rational Discounting
Violations of Discounted Utility
1. Magnitude Effect
2. Sign Effect

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