Adele Doesn't Like to Wait to Purchase Items That She

Essay

Adele doesn't like to wait to purchase items that she wants, but Agnes prefers to pay for things she wants in full. They are both planning on buying a video game system. The store is running an offer that consumers can buy the system for $400 or pay $120 per month for four months. Either choice allows the consumer to leave the store with the video game system. Using the discount rate of 2% per month, which payment scheme leaves the consumer better off? If Adele is a hyperbolic discounter and if her per month discount rates are 50% for the first two months and 2% thereafter, which will she prefer?