Quiz on Time Preference

What is Time Preference?

True/False: Time Preference is the idea that individuals prefer to receive rewards sooner rather than later.

True | False

What is the concept of Present Bias?

Fill-in-the-blank: Present Bias is the tendency of individuals to overestimate the value of present rewards over future rewards.

What is the concept of Intertemporal Choice?

Multiple Choice: Intertemporal Choice is the study of

a) the effects of time on individual decision-making | b) the effects of individual decision-making on time | c) the effects of time on economic decision-making | d) the effects of economic decision-making on time

a) the effects of time on individual decision-making

What is the concept of Hyperbolic Discounting?

Short Answer:

Hyperbolic Discounting is a theory that suggests that people tend to discount future rewards more than those that are present, meaning that they are more likely to choose a smaller reward sooner than a larger reward later.

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Time Preference Practice Sheet

1. What is the definition of Time Preference?

Answer: Time Preference is an economic concept that states that people prefer to receive a benefit sooner rather than later. It is based on the idea that people are more likely to choose a benefit that is available immediately over one that is only available in the future.

1. True or False: Time Preference is based on the idea that people are more likely to choose a benefit that is available in the future over one that is available immediately.

True or False: False

1. What is the difference between a positive and a negative time preference?

Answer: A positive time preference means that people prefer to receive a benefit in the future over one that is available immediately. A negative time preference means that people prefer to receive a benefit immediately over one that is available in the future.

1. What is the effect of time preference on economic decisions?

Answer: Time preference affects economic decisions because it determines how people weigh the costs and benefits of different choices. People with a positive time preference are more likely to choose options that provide a benefit in the future, while people with a negative time preference are more likely to choose options that provide a benefit immediately.

1. What is the difference between present and future value?

Answer: Present value is the value of a good or service at the present time. Future value is the value of a good or service at some point in the future. Time preference affects the present and future value of a good or service because it determines how people weigh the costs and benefits of different choices.

Answers Key: 1. Time Preference is an economic concept that states that people prefer to receive a benefit sooner rather than later. It is based on the idea that people are more likely to choose a benefit that is available immediately over one that is only available in the future. 2. False 3. A positive time preference means that people prefer to receive a benefit in the future over one that is available immediately. A negative time preference means that people prefer to receive a benefit immediately over one that is available in the future. 4. Time preference affects economic decisions because it determines how people weigh the costs and benefits of different choices. People with a positive time preference are more likely to choose options that provide a benefit in the future, while people with a negative time preference are more likely to choose options that provide a benefit immediately. 5. Present value is the value of a good or service at the present time. Future value is the value of a good or service at some point in the future. Time preference affects the present and future value of a good or service because it determines how people weigh the costs and benefits of different choices.