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The Complete Idiot's Guide to Game Theory by Edward Rosenthal, Ph.D., Edward C. Rosenthal

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Intertemporal Choice

Suppose I offered you the option of receiving $15 now or else receiving a different sum a month from now. When behavioral economist Richard Thaler asked subjects how much they would need to receive a month from now in order to match the immediate payment of $15, he found that the median response was $20 (in other words, half of all respondents answered less than $20, and half answered at least $20).
This may seem reasonable to you—if you had to wait a month to get the money, you’d find it natural to ask for more. But now think about this: suppose I offered you either $15 to be received a year from now or $20 in 13 months. You would probably prefer the $20 in 13 months. In fact, most people who prefer $15 now to $20 in a ...

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