Hyperbolic discounting of the far-distant future

DOI10.1016/J.ECONLET.2017.03.031MaRDI QIDQ1673461zbMATH OpenOpenAlexFDO

Authors Nina Anchugina, Matthew J. Ryan, Arkadii Slinko

Publication date 12 September 2018

Published in Economics Letters (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1702.01362

zbMATH Keywords

hyperbolic discountinguncertainty

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24)

Abstract: We prove an analogue of Weitzman's (1998) famous result that an exponential discounter who is uncertain of the appropriate exponential discount rate should discount the far-distant future using the lowest (i.e., most patient) of the possible discount rates. Our analogous result applies to a hyperbolic discounter who is uncertain about the appropriate hyperbolic discount rate. In this case, the far-distant future should be discounted using the probability-weighted harmonic mean of the possible hyperbolic discount rates.

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Cites work

• A note on the Loewenstein-Prelec theory of intertemporal choice
• Golden Eggs and Hyperbolic Discounting
• Proportional Discounting of Future Costs and Benefits
• Value Functions for Infinite-Period Planning
• Why the far-distant future should be discounted at its lowest possible rate

Cited in

(7)

• Why the far-distant future should be discounted at its lowest possible rate
• Gamma discounting and expected net future value
• Discounting and altruism to future decision-makers
• A new argument in favor of hyperbolic discounting in very long term project appraisal
• Proportional Discounting of Future Costs and Benefits
• Railroad discounting
• Risk-adjusted gamma discounting

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