Efficiency of consumer intertemporal choice under life cycle cost conditions

Many decisions made by consumers are intertemporal. Life cycle cost (LCC) conditions represent a specific type of intertemporal decisions, typically referring to items involving two cost components: present purchase price and future maintenance costs. This paper presents a conceptual framework for analyzing consumer LCC decision making. Within this framework the notion of choice efficiency is highlighted. The main contribution of the study is the direct estimation of consumers’ choice efficiency, as compared to previous studies that estimate only consumers’ implicit discount rates. Effects of situational and personal variables on efficiency of choice are estimated by means of a series of manipulated choice settings. The main empirical findings show situational effects of monetary size, type of object and time horizon. Additional findings show the effect of personal variables such as gender, marital status and education.