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Assumption of Constant Impatience in the Intertemporal Choice Model
A key simplifying assumption of the intertemporal choice model is that an individual's level of impatience remains constant over time. The model presumes that a person's preference for consuming something today versus tomorrow is identical to their preference for consuming it tomorrow versus the day after. For instance, the model treats the impatience felt in wanting a favorite meal now instead of in one day as being no different from the impatience felt about having that same meal in one day versus in two days.
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CORE Econ
Economics
Social Science
Empirical Science
Science
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
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Learn After
An individual is making choices about when to receive a prize. They find that they are equally happy with receiving $100 today or receiving $110 one year from now. If this individual's level of impatience is assumed to be constant over time, which of the following statements must also be true?
A student decides on Sunday that they are indifferent between studying for one hour on Monday or studying for one hour and fifteen minutes on Tuesday. According to the economic assumption that an individual's level of impatience is constant over time, it logically follows that when Monday arrives, the student will still be indifferent between studying for one hour immediately (on Monday) or studying for one hour and fifteen minutes on Tuesday.
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An economic model is built on the assumption that an individual's level of impatience is constant over time. This means their preference for having something sooner rather than later does not change based on how far in the future the choice is. Which of the following scenarios describes a behavior that is INCONSISTENT with this assumption?
An economic model is built on the assumption that an individual's level of impatience is constant over time. This means their preference for having something sooner rather than later does not change based on how far in the future the choice is. Match each of the following behaviors with the category that best describes its relationship to this assumption.
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