Topic
Discount function
About: Discount function is a research topic. Over the lifetime, 300 publications have been published within this topic receiving 24560 citations.
Papers published on a yearly basis
Papers
TL;DR: The authors analyzes the decisions of a hyperbolic consumer who has access to an imperfect commitment technology: an illiquid asset whose sale must be initiated one period before the sale proceeds are received.
Abstract: Hyperbolic discount functions induce dynamically inconsistent preferences, implying a motive for consumers to constrain their own future choices. This paper analyzes the decisions of a hyperbolic consumer who has access to an imperfect commitment technology: an illiquid asset whose sale must be initiated one period before the sale proceeds are received. The model predicts that consumption tracks income, and the model explains why consumers have asset-specific marginal propensities to consume. The model suggests that financial innovation may have caused the ongoing decline in U. S. savings rates, since financial innovation in- creases liquidity, eliminating commitment opportunities. Finally, the model implies that financial market innovation may reduce welfare by providing âtoo muchâ liquidity.
6,694 citations
TL;DR: In this paper, the authors discuss the discounted utility (DU) model, its historical development, underlying assumptions, and "anomalies" -the empirical regularities that are inconsistent with its theoretical predictions.
Abstract: This paper discusses the discounted utility (DU) model: its historical development, underlying assumptions, and "anomalies" - the empirical regularities that are inconsistent with its theoretical predictions. We then summarize the alternate theoretical formulations that have been advanced to address these anomalies. We also review three decades of empirical research on intertemporal choice, and discuss reasons for the spectacular variation in implicit discount rates across studies. Throughout the paper, we stress the importance of distinguishing time preference, per se, from many other considerations that also influence intertemporal choices.
5,837 citations
TL;DR: In this paper, the authors enumerate a set of discounted utility anomalies analogous to the EU anomalies and propose a model that accounts for the anomalies, as well as other intertemporal choice phenomena incompatible with DU.
Abstract: Research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility (EU) anomalies—behaviors that violate the expected utility axioms. The relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility (DU) anomalies. We enumerate a set of DU anomalies analogous to the EU anomalies and propose a model that accounts for the anomalies, as well as other intertemporal choice phenomena incompatible with DU. We discuss implications for savings behavior, estimation of discount rates, and choice framing effects.
2,564 citations
TL;DR: In this paper, individual discount rates for losses and gains were estimated from survey evidence and they were found to vary inversely with the size of the reward and the length of time to be waited.
2,516 citations
TL;DR: In this paper, the authors found that children, young adults, and older adults chose between immediate and delayed monetary rewards, and the amount of the delayed reward was held constant while its delay was varied.
Abstract: In this study, children, young adults, and older adults chose between immediate and delayed hypothetical monetary rewards The amount of the delayed reward was held constant while its delay was varied All three age groups showed delay discounting, that is, the amount of an immediate reward judged to be of equal value to the delayed reward decreased as a function of delay The rate of discounting was highest for children and lowest for older adults, predicting a life-span developmental trend toward increased self-control Discounting of delayed rewards by all three age groups was well described by a single function with age-sensitive parameters (all R2s > 94) Thus, even though there are quantitative age differences in delay discounting, the existence of an age-invariant form of discount function suggests that the process of choosing between rewards of different amounts and delays is qualitatively similar across the life span
1,210 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 14 |
| 2020 | 17 |
| 2019 | 17 |
| 2018 | 14 |
| 2017 | 19 |
| 2016 | 19 |