A Note on the Loewenstein-Prelec Theory of Intertemporal Choice

In one of the major contributions to behavioral economics, Loewenstein and Prelec [Loewenstein, G., Prelec, D., 1992, Anomalies in intertemporal choice: evidence and an interpretation; The Quarterly Journal of Economics 107, 573-597] set the foundations for the behavioral approach to decision making over time. We correct a number of errors in Loewenstein and Prelec (1992). Furthermore, we provide a correct, more direct and simpler derivation of their generalized hyperbolic discounting formula that has formed the basis of much recent work on temporal choice