Non-constant Quasi-hyperbolic Discounting

Ling Peng () and William W. Hager
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Ling Peng: School of Management, Guizhou University
William W. Hager: University of Florida

ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, 2017, vol. 51, issue 2, 145-164

Abstract: This paper puts forward a non-constant quasi-hyperbolic (NQH) discount function which can control the switch point of preference reversal in a flexible way. A non-standard Hamilton-Jacobi-Bellman (HJB) equation enables us to produce time-consistent solution under stochastic non-constant quasi-hyperbolic (SNQH) discounting. The sophisticated individual, the naïve individual and the pre-committed individual are compared analytically and numerically.

Keywords: preference reversal; time-consistent solution; sophisticated individual; naïve individual; pre-committed individual. (search for similar items in EconPapers)
JEL-codes: C73 E21 G11 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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