Memory and discounting: Theory and evidence

Te Bao, Yun Dai and Xiaohua Yu

Journal of Economic Dynamics and Control, 2018, vol. 88, issue C, 21-30

Abstract: Heterogeneous memory capacity is largely neglected in the economics literature, although it may have profound economic implications. Adopting the concept of “memory utility” proposed by Gilboa, Postlewaite, and Samuelson (2016), we explore the relationship between memory capacity and individual discounting behavior by building a simple two-period model and comparing its predictions with experimental data. Both theoretical and experimental evidence confirm that memory capacity and discount rates are positively correlated.

Keywords: Memory utility; Intertemporal consumption; Individual discount rates; Time preference (search for similar items in EconPapers)
JEL-codes: C91 D90 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:88:y:2018:i:c:p:21-30

DOI: 10.1016/j.jedc.2018.01.016

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