Julia's Intrinsic Impatience Illustrated by an Indifference Curve

Quantifying Julia's Intrinsic Impatience via Point B'

Consumption Behavior with No Intrinsic Impatience

Causes of Intrinsic Impatience: Myopia and Prudence

Explaining Disparate Outcomes: The Impact of Situational Differences on Identical Preferences

An individual has a financial plan that provides them with $1,000 of consumption this year and $1,000 of consumption next year. They are then offered an alternative: they can give up $100 of consumption this year in exchange for an additional $110 of consumption next year. The individual states that they are indifferent between their original plan and this new alternative. Based on this information, what can be concluded about their time preference?

Identifying Intrinsic Impatience in Financial Decisions

An individual who has an equal amount of consumption planned for the present and the future demonstrates intrinsic impatience if they are willing to give up $50 of present consumption in exchange for exactly $50 of future consumption.

An individual who has an equal amount of consumption planned for the present and the future demonstrates intrinsic impatience if they are willing to give up $50 of present consumption in exchange for exactly $50 of future consumption.

Comparing Degrees of Intrinsic Impatience

Differentiating Reasons for Time Preference

Match each scenario describing an individual's consumption choice to the type of time preference it best represents.

An economist observes an individual who has arranged their finances to have exactly the same amount of spending money available this year and next year. Which of the following scenarios would most clearly demonstrate that this individual has an inherent preference for consuming now rather than later?

Analyzing Consumption Preferences

Explaining the Manifestation of Intrinsic Impatience