Hyperbolic discounting and the standard model: Eliciting discount functions

Jawwad Noor ()

Journal of Economic Theory, 2009, vol. 144, issue 5, pages 2077-2083

Abstract: Experiments on static intertemporal choice find evidence of particularly extreme impatience toward immediate rewards. While this is often taken as support for hyperbolic discounting, it could also arise because the most likely participants in experiments may be those with the most immediate need for money. We conduct a calibration exercise and find that the extreme impatience observed in experiments can be accommodated by a standard exponential discounting model with no discounting and expectation of a [`]small' increase in the base consumption level. The calibration uses existing estimates of curvature of utility.

Keywords: Experiments; Hyperbolic; discounting; Exponential; discounting; Preference; reversals; Decreasing; impatience; DU; anomalies (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:5:p:2077-2083

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