Intertemporal Choice Lists and Maximal Likelihood Estimation of Discount Rates

Dag Einar Sommervoll (dag.einar.sommervoll@nmbu.no), Stein Holden (stein.holden@nmbu.no) and Mesfin Tilahun (mesfintilahungelaye@gmail.com)
Additional contact information
Dag Einar Sommervoll: Centre for Land Tenure Studies, Norwegian University of Life Sciences, Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway
Mesfin Tilahun: Centre for Land Tenure Studies, Norwegian University of Life Sciences, Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway

No 9/23, CLTS Working Papers from Norwegian University of Life Sciences, Centre for Land Tenure Studies

Abstract: The experiments designed to estimate real-life discount rates in intertemporal choice often rely on ordered choice lists, where the list by design aims to capture a switch point between near- and far-future alternatives. Structural models like a Samuelson discounted utility model are often fitted to the model using maximal likelihood estimation. We show that dominated tasks, that is, choices that do not define the switch point, may bias ML estimates profoundly and predictably. More (less) dominated near future tasks give higher (lower) discount rates. Simulation analysis indicates estimates may remain largely unbiased using switch point-defining tasks only.

Keywords: Choice lists; time discounting; maximal likelihood estimation (search for similar items in EconPapers)
JEL-codes: C13 C81 C93 D91 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2023-12-19
New Economics Papers: this item is included in nep-dcm, nep-ecm, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://main-bvxea6i-kdsvgmpf4iwws.eu-5.platformsh ... port_9_2023_Full.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:nlsclt:2023_009

Access Statistics for this paper

More papers in CLTS Working Papers from Norwegian University of Life Sciences, Centre for Land Tenure Studies Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Ephrida Tione (sarah.ephrida.tione@nmbu.no).