Year: 1995
Author: Ahlbrecht, Martin, Weber, Martin
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 4 : pp. 535–568
Abstract
This paper argues that hyperbolic discounting models can be used in prescriptive theory of intertemporal choice whenever decisions are binding for the future. First, we derive an axiomatic basis that unifies standard and hyperbolic discounting models. The decision weights are written as 1/(1 + i)^a(t) is a time perception function. The standard discounting model corresponds to a linear a whereas hyperbolic models refer to nonlinear as. Second, we make a qualification to an inconsistency argument brought forward against hyperbolic discounting models. We show that the strength of this argument, and thus, the applicability of hyperbolic models to prescriptive theory, depends on the decision context.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/schm.115.4.535
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 4 : pp. 535–568
Published online: 1995-04
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 34
Author Details
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