Editing Decision theory (section)

===Intertemporal choice===
{{Main|Intertemporal choice}}
Intertemporal choice is concerned with the kind of choice where different actions lead to outcomes that are realized at different stages over time.<ref>{{Cite book|title=Essays In Decision Making: A Volume in Honour of Stanley Zionts|last1=Karwan|first1=Mark|last2=Spronk|first2=Jaap|last3=Wallenius|first3=Jyrki|date=2012|publisher=Springer Science & Business Media|isbn=9783642644993|location=Berlin|pages=135}}</ref> It is also described as [[cost-benefit]] decision making since it involves the choices between rewards that vary according to magnitude and time of arrival.<ref>{{Cite book|title=Aging and Decision Making: Empirical and Applied Perspectives|last1=Hess|first1=Thomas M.|last2=Strough|first2=JoNell|last3=Löckenhoff|first3=Corinna|author3-link= Corinna Löckenhoff |date=2015|publisher=Elsevier|isbn=9780124171558|location=London|pages=21}}</ref> If someone received a windfall of several thousand dollars, they could spend it on an expensive holiday, giving them immediate pleasure, or they could invest it in a pension scheme, giving them an income at some time in the future. What is the optimal thing to do? The answer depends partly on factors such as the expected [[interest rate|rates of interest]] and [[inflation]], the person's [[life expectancy]], and their confidence in the pensions industry. However even with all those factors taken into account, human behavior again deviates greatly from the predictions of prescriptive decision theory, leading to alternative models in which, for example, objective interest rates are replaced by [[hyperbolic discounting|subjective discount rates]].{{cn|date=April 2025}}