1. Education
Send to a Friend via Email
You can opt-out at any time. Please refer to our privacy policy for contact information.

Time Preference


Definition: A utility function may or may not have the property of time preference. Time preference is an intense preference to receive goods or services immediately.

The discount factor preference to avoid delay must be more than multiplictavely linear in the delay time passed, or one would not use this term to describe the utility function. In theory this attribute is analytically distinct from other reasons to want something sooner, such as interest rates; the bounded rationality problem of remembering how and when to consume the good later; or discounting of future events for reasons of opportunity, risk, or uncertainty (e.g., the chance of surviving to a later time).

There is evidence that human behavior exhibits great impatience which might be modeled well by time preference and perhaps can perhaps be distinguished from these other factors. So one may read references to empirical observations of time preference, though as far as this editor can tell the concept is quite theoretical and some jump is required to leave all other explanations aside and link it directly to an observation. Terms related to Time Preference:

About.Com Resources on Time Preference:

Writing a Term Paper? Here are a few starting points for research on Time Preference:

Books on Time Preference:

Journal Articles on Time Preference:

©2014 About.com. All rights reserved.