ABSTRACT. Existing models of intertemporal choice normally assume that people are impatient, preferring valuable outcomes sooner rather than later, and that preferences satisfy the formal condition of independence, or separability, which states that the value of a sequence of outcomes equals the sum of the values of its component parts. The authors present empirical results that show both of these assumptions to be false when choices are framed as being between explicitly defined sequences of outcomes. Without a proper sequential context, people may discount isolated outcomes in the conventional manner, but when the sequence context is highlighted, they claim to prefer utility levels that improve over time. The observed violations of additive separability follow, at least in part, from a desire to spread good outcomes evenly over time.
Decisions of importance have delayed consequences. The choice of education, work, spending and saving, exercise, diet, as well as the timing of life events, such as schooling, marriage, and childbearing, all produce costs and benefits that endure over time. Therefore, it is not surprising that the problem of choosing between temporally distributed outcomes has attracted attention in a variety of disciplinary settings, including behavioral psychology, social psychology, decision theory, and economics.
In spite of this disciplinary diversity, empirical research on intertemporal choice has traditionally had a narrow focus. Until a few years ago, virtually all studies of intertemporal choice were concerned with how people evaluate simple prospects consisting of a single outcome obtained at a point in time. The goal was to estimate equations that express the basic relationship between the atemporal value of an outcome and its value when delayed.
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