Understanding intertemporal choices

Enrica Carbone ()

Applied Economics, 2006, vol. 38, issue 8, 889-898

Abstract: Previous experimental results show clearly that many subjects do not optimize when solving a life-cycle consumption problem. What do they do? This paper attempts to resolve this question, looking at the discounting, hyperbolic and rolling models as possible explanations. Data from two experiments (one an experiment with a typical subject pool and the second an experiment with subjects from the CentER panel) is used, and the advantage of having experimental data is exploited, which means that one can actually estimate the hyperbolic model. It is shown that the (exponential) discounting model appears to give the best explanation - suggesting that subjects do look ahead (as they should) but increasingly less as time passes (as they should not in the context of these experiments).

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840500399313 (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:taf:applec:v:38:y:2006:i:8:p:889-898

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840500399313

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().