Age-induced acceleration of time

Implications for intertemporal choice

Research output: Contribution to journalArticle

Abstract

Our perception of time is both nonlinear and nonstationary, which makes preference reversals possible. I decompose the sources of dynamic inconsistency into a time acceleration effect and a time compression effect. Standard economic models focus only on the second effect. I show that when the perceived flow of time accelerates with age, the two effects can offset each other for hyperbolic discounters but not for exponential discounters. Such hyperbolic discounters would report discount rates that seem to imply dynamic inconsistency but would nonetheless manifest dynamic consistency in actual choices over time.

Original languageEnglish (US)
Pages (from-to)143-152
Number of pages10
JournalJournal of Economic Behavior and Organization
Volume153
DOIs
StatePublished - Sep 1 2018

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Intertemporal choice
Dynamic inconsistency
Preference reversal
Discount rate
Compression
Dynamic consistency

Keywords

  • Age
  • Discounting
  • Dynamic consistency
  • Hyperbolic
  • Intertemporal choice
  • Preference reversals
  • Time

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Cite this

Age-induced acceleration of time : Implications for intertemporal choice. / Lemoine, Derek M.

In: Journal of Economic Behavior and Organization, Vol. 153, 01.09.2018, p. 143-152.

Research output: Contribution to journalArticle

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