What is an intertemporal choice?
The intertemporal option is the term used in economics to describe the impact today made today on the type of options available in the future. This type of choice is found not only in the management of the individual's financial resources, but also in decisions that companies make in terms of purchases and consumption. The aim is to accurately predict the outcome of the intertemporal choice and decide whether this effect on the future is positive or negative.
One of the basic concepts of intertemporal choices is related to consumption. In principle, the idea is that if consumption is not happening today, there is a great chance that tomorrow will take place. Assuming that the prices of the goods consumed will be lower tomorrow, it may be in the best interest of the consumer to buy and buy goods and services tomorrow at the time when prices decrease. As with most economic decisions, this is a certain risk as prices can simply remain at the same level or even increase if unforeseen F appearsactuators that affect the demand for these products.
, along with the fact that it is when consuming is taking place, it also deals with what is happening with resources that would be used in the consumption process. For example, an individual may decide that instead of buying a house today, he will invest money in some kind of account with interest. Ten years later, the funds are downloaded to buy a house as a significantly lower rate. Meanwhile, the result of this decision of the consumer that the funds stored has obtained interest rates that allowed to pay more purchase price, resulting in a lower amount of financing. In this scenario, the consumption is not only delayed for some time, but the sources that would be used early are grown, allowing to get more and useful.
The idea of an intertemporal choice is to get the greatest advantage from consumption. By determining whether expenditure on personal spotToday, they will provide more revenues, rather than tomorrow, it is possible to timing consumption for the best advantage. Failure to take into account all relevant information can result in inaccurately predicting the outcome and eventually cause the consumer to gain less satisfaction from the transaction. For this reason, it is important to consider as much results as possible.