Multi-attribute heuristics and intertemporal choices

We consider the intertemporal trade-off between obtaining a small amount soon or a large one later. To solve this trade-off, we propose a general model of a multi-attribute heuristic that is rooted in exponential discounting and contains several models discussed in the literature as special cases. First, we derive the necessary and sufficient conditions for time-consistent behavior. Second, we show that level effects lead to behavior as if discounting hyperbolically. Finally, we show that the imputed discount factors – based on the presumption of exponential discounting – can over- as well as underestimate the true discount rate.