Formulating effective social policy requires careful analysis of the intertemporal decisions that individuals make. For example, responding to social problems like drug use, criminal activity, teenage pregnancy, and high-school failure, requires understanding of the intertemporal decisions that contribute to these outcomes. Enhancing the understanding of intertemporal choices is the focus of this study. It will emphasize interdisciplinary research projects motivated by behavioral anomalies in intertemporal decision-making. Each project analyzes a new model of intertemporal choice suggested by evidence and experiments in the psychology literature. These psychological models will be evaluated using standard economic analysis. This study involves three different research projects. The first project analyzes the behavior of decision-makers with hyperbolic discount functions. Hyperbolic discount functions suggest a multiple-self interpretation of intertemporal decision-making, generating an interesting framework for understanding phenomena like self-control. The second proposes a physiological microfoundation for environmentally dependent motivational states or drives. This project uses physiological theories of homeostasis and Pavlovian conditioning to build a theory of endogenous motivational states. For example, the model proposed here explains how environmental cues elicit drives for instantaneous gratification. Finally, the third project builds on the psychology literature about over optimism. This project examines the behavior of decision makers with over optimistic priors and considers the consequences for consumption behavior.
