Anticipation and the Valuation of Delayed Consumption

This paper presents a model of intertemporal choice that incorporates "savoring" and "dread"-i.e., utility from anticipat ion of delayed consumption. The model explains why an individual with positive time preference may delay desirable outcomes or get unpleas ant outcomes over with quickly, contrary to the prediction of convent ional formulations of intertemporal choice. Implications of savoring and dread for savings behavior, empirical estimation of discount rate s, and public policy efforts to combat myopic behavior are explored. The model provides an explanation for common violations of the indepe ndence axiom as applied to intertemporal choice.