Evaluating Utility Streams

Ken Binmore ()
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Ken Binmore: Bristol University

Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2021, vol. 38, issue 1, No 1, 14 pages

Abstract: Abstract This paper proposes a radical alternative to discounting utility streams that allows each payoff in a stream to be treated equally. It is based on the psychology of how humans perceive time—not as the objective clicking of time on a clock—but in terms of the incidents to which attention needs to be paid. The paper’s conclusions receive some support from the discovery of the Peak-End Rule, in which laboratory subjects recall only the worst and the last experience during painful episodes.

Keywords: Maximin criterion; Subjective time; Discounting; Peak-End Rule (search for similar items in EconPapers)
JEL-codes: B4 D9 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s41412-021-00114-3

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