Home » Eng Finance » Finance I

Finance I

Select topic from the list on the left. Should you not find what you are looking for, please feel free to send us a message and we will try to find it for you.

Interest, time preference theory of

Interest, time preference theory of

A psychological theory of the existence of rates of interest. An individual prefers consumption now to consumption in the future for two reasons. First, he is aware of the possibility that he may be dead before he can derive the benefits from postponing consumption. Second, and less rationally, there exists a tendency for people to undervalue future benefits – a ‘deficiency of the telescopic faculty’.

Reference: The Penguin Dictionary of Economics, 3rd edt.