ABSTRACT. This paper introduces time-tradeoff (TTO) sequences as a new tool to analyze time inconsistency and intertemporal choice. TTO sequences simplify the measurement of discount functions, requiring no assumption about utility. They also simplify the qualitative testing of time inconsistencies, and allow for quantitative measurements thereof. TTO sequences can easily be administered using only pencil and paper. They readily show which subjects are most prone to time inconsistencies. We further use them to axiomatically analyze and empirically test (quasi-)hyperbolic discount functions. An experiment demonstrates the feasibility of measuring TTO sequences. Our data falsify (quasi-)hyperbolic discount functions and call for the development of models that can accommodate increasing impatience.

E42, hyperbolic discounting, increasing impatience, stationarity, time inconsistency, time preference
Laboratory, Individual Behavior (jel C91), Intertemporal Consumer Choice; Life Cycle Models and Saving (jel D91)
ERIM Top-Core Articles
Management Science
Accepted Manuscript
Erasmus Research Institute of Management

Attema, A.E, Bleichrodt, H, Rohde, K.I.M, & Wakker, P.P. (2010). Time-Tradeoff Sequences For Analyzing Discounting And Time Inconsistency. Management Science, 1–38. Retrieved from http://hdl.handle.net/1765/21096