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A wide range of consumer decision making may have the temporal structure where the customer buys a dessert or cookies to seek health benefits or pays more for an efficient appliance or refinances loans to lower the future interest rates.
The intertemporal preference ranges from very simple to highly complex like from a low value like $10 tomorrow to $20 in a year.
The term intertemporal choices are used for decisions made in everyday life which involve the selection between the outcomes available at different times in the future like investing savings, mutual funds strategies, for getting new properties in London, etc.
Such a choice requires deciding whether the additional money offered at a later date is worth waiting for the extra time spent on receiving the larger rewards.
It requires the integration information related to the recompense size and time delays, but computationally, it is a fairly simple decision.
The individual difference in temporal discounting or the decline in the subjective value of a particular reward due to time delay is very common.
The intertemporal choice is seen as the area where the decision-making process gets better with growing age and older adults make a better quantitative assessment related to maximizing absolute units of the rewards.
They may choose larger gains that come in a long duration over early smaller rewards.
In the condition, when the discount gets the value of an option, based on the delay, the amount by which the value of the option decline, as it is delayed is measured by the discount rate.
The early researches on the behavioral aspects of the preferences have documentation anomalies or violations, where the normative model assumes that the discount rate is a constant and it does not depend on the source of utility.
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