A new test of convexity–concavity of discount function

Pavlo R. Blavatskyy () and Hela Maafi ()
Additional contact information
Pavlo R. Blavatskyy: Montpellier Business School
Hela Maafi: Université Paris 8

Theory and Decision, 2020, vol. 89, issue 2, No 1, 136 pages

Abstract: Abstract Discounted utility theory and its generalizations (e.g., quasihyperbolic discounting, generalized hyperbolic discounting) use discount functions for weighting utilities of outcomes received in different time periods. We propose a new simple test of convexity–concavity of discount function. This test can be used with any utility function (which can be linear or not) and any preferences over risky lotteries (expected utility theory or not). The data from a controlled laboratory experiment show that about one third of experimental subjects reveal a concave discount function and another one third of subjects reveal a convex discount function (for delays up to two month).

Keywords: Intertemporal choice; Time preference; Discounted utility; Convexity; Discount function (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11238-020-09747-3 Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:theord:v:89:y:2020:i:2:d:10.1007_s11238-020-09747-3

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

DOI: 10.1007/s11238-020-09747-3

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().