Intertemporal choice
Intertemporal choice is a process by which people form decisions approximately what together with how much to hit at various points in time, when choices at one time influence the possibilities usable at other points in time. These choices are influenced by the relative proceeds people assign to two or more payoffs at different points in time. nearly choices require decision-makers to trade off costs in addition to benefits at different points in time. These decisions may be approximately saving, work effort, education, nutrition, exercise, health care and so forth. Greater preference for immediate smaller rewards has been associated with numerous negative outcomes ranging from lower salary to drug addiction.
Since early in the twentieth century, economists have analyzed intertemporal decisions using the discounted utility model, which assumes that people evaluate the pleasures and pains resulting from a decision in much the same way that financial markets evaluate losses and gains, exponentially 'discounting' the usefulness of outcomes according to how delayed they are in time. Discounted utility has been used to describe how people actually make intertemporal choices and it has been used as a tool for public policy. Policy decisions about how much to spend on research and development, health and education all depend on the discount rate used to analyze the decision.