Mental Zooming as Variable Asset Integration in Inter-Temporal Choice

Abstract

Our time preferences deviate systematically from that of Homo economicus. They seem to be driven by a form of mental zooming, where higher and more distant amounts induce a more holistic perspective in contrast to smaller and near future amounts. We model zooming as variable asset integration and ask whether this can explain the observed variation in discount rates in experiments. It can. Equally important, the zooming for both time and magnitude is similar across two countries (Ethiopia and Malawi) and within a country (Ethiopia).