Asset Prices and Hyperbolic Discounting

Liutang Gong, William Smith and Heng-Fu Zou ()
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William Smith: Department of Economics, Fogelman College of Business & Economics University of Memphis

Annals of Economics and Finance, 2007, vol. 8, issue 2, 397-414

Abstract: This paper explores the implications of hyperbolic discounting for asset prices and rates of return. Hyperbolic discounting has no effect on the equity premium. However, by making people less patient, causes stock prices to be lower, and interest rates higher, than with exponential discounting. In addition, hyperbolic discounting dampens the marginal effect of risk on stock prices, relative to the exponential case.

Keywords: Asset-Pricing; Hyperbolic Discounting (search for similar items in EconPapers)
JEL-codes: D91 E21 G11 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Asset Prices and Hyperbolic Discounting (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2007:v:8:i:1:p:397-414

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