Lecture on Intertemporal Choice

I am currently giving a set of lectures as part of a module "Behavioural Economics: Concepts and Theories" in Stirling. I am posting brief informal summaries of some of these lectures on the blog to generate discussion. Thanks to Mark Egan for a lot of help in putting these together online.

Decisions that deliver benefits and costs over different time periods are central to the study of economics and a key area of interaction between economics, psychology and policy. This lecture reviews the basic discounted utility model. It examines hyperbolic discounting and dual-process accounts of inter-temporal choice. The lecture reviews domain specific discounting, children's discounting, preferences for sequences, heuristics employed in judging future utility, evidence on the power of defaults. It then examines recent evidence on neurological mechanisms involved in time preferences. The lecture concludes with a discussion of the policy issues at stake, in particular the implications for regulation of financial markets.

Readings:

Frederick, S., Loewenstein, G. & O’Donoghue, T. (2002), "Time discounting and time preference: a critical review", Journal of Economic Literature, 40: 351-401

Elster, J. (1985). Ulysses and the Sirens: Studies in Rationality and Irrationality. Cambridge: Cambridge University Press.

Fehr, E. (2002), "The economics of impatience", Behavioural Science, 415: 269-272.

Textbooks:

1. Camerer, Loewenstein & Rabin (2004) Advances in Behavioral Economics

2. Frey & Stutzer (2007), Economics and Psychology: A Promising New Cross-Disciplinary Field

3. Loewenstein (2007), Exotic Preferences: Behavioral Economics and Human Motivation

4. Shafir (2013), The Behavioral Foundations of Public Policy

5. Angner (2012), A Course in Behavioural Economics

6. Wilkinson & Klaes (2012) An Introduction to Behavioural Economics

7. Varian (2008), Intermediate Microeconomics