Discounting and extraction behavior in continuous time resource experiments

Marion Davin, Dimitri Dubois, Katrin Erdlenbruch and Marc Willinger
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Marion Davin: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier
Dimitri Dubois: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier

CEE-M Working Papers from CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro

Abstract: Experimenting with dynamic games raises issues about implementing discounting in experiments. Theoretical rational decision-makers evaluate payoff streams by converting them to a reference period, often "time zero." In experiments, subjects can adapt their strategy continuously. We explore individual behavior in a dynamic resource extraction experiment with two treatments: "z-discounting" (evaluating gains at time zero) and "p-discounting" (evaluating gains in present-time equivalents). Contrary to theoretical predictions, our data shows a significant positive treatment effect, indicating more substantial extraction under p-discounting. This challenges the theoretical model and prompts discussion on methodological considerations for discounting in laboratory settings.

Keywords: dynamic optimization; discounting; continuous time; laboratory experiment; time consistency (search for similar items in EconPapers)
Date: 2024-02-26
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04477409v1
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Related works:
Working Paper: Discounting and extraction behavior in continuous time resource experiments (2024)
Working Paper: Discounting and extraction behaviour in continuous time resource experiments (2023)
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