Final answer:
Customers engage in intertemporal decision making during purchases with high risk and uncertainty, where they must decide between consuming now or delaying for future investment or saving. This process involves financial planning over an extended period and accounting for imperfect information.
Step-by-step explanation:
Customers typically engage in intertemporal decision making when the purchase decision involves a lot of risk and uncertainty.Customers typically engage in intertemporal decision making when the purchase decision involves a lot of risk and uncertainty. Intertemporal decision making refers to making decisions across time, particularly in financial markets where people decide when to consume goods: now or in the future. This type of decision making is prevalent in investment or savings decisions, as they are made over a period of time and involve a certain level of risk and uncertainty.
Intertemporal decision making is related to the concept that economists use to describe situations where individuals or participants in financial markets must decide when they prefer to consume goods: now or in the future. Unlike everyday decisions, such as what to buy from a grocery store, intertemporal decisions involve planning over an extended period, often considering investment or savings plans.
This concept highlights the deliberation between the immediate consumption of goods and the deferral of consumption in favor of investing or saving for a more significant benefit later. Thus, in scenarios with higher financial stakes, the degree of imperfect information can be quite high.