July 2004

IZA DP No. 1228: A Vague Theory of Choice over Time

published in:B.E. Journal of Theoretical Economics: Advances in Theoretical Economics , 2006, 6 (1), 1265-1265

We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly ‘blurred’ as the events are pushed further in time. We axiomatise a class of preference representations which can be specialised to rationalise ‘anomalies’ such as preference reversals and cyclical preferences. We also present an application to a form of time inconsistency which we dub ‘the now or never fallacy’.