The hyperbolic factor: A measure of time inconsistency

Journal of Risk and Uncertainty

Volumn 41, Issue 2, 2010, Pages 125-140

  Rohde, Kirsten I M ^a  

^a ERASMUS UNIVERSITY ROTTERDAM   (Netherlands)

Author keywords

Hyperbolic discounting; Hyperbolic factor; Time preference; Time inconsistency

Indexed keywords

EID: 77955176584     PISSN: 08955646     EISSN: 15730476     Source Type: Journal    
DOI: 10.1007/s11166-010-9100-2     Document Type: Article

References (52)

1. Abdellaoui, M. (2002). A genuine rank-dependent generalization of the von Neumann-Morgenstern expected utility theorem. Econometrica, 70, 717-736.
2. Akerlof, G. A. (2002). Behavioral macroeconomics and macroeconomic behavior. American Economic Review, 92, 411-433.
3. al-Nowaihi, A., & Dhami, S. (2006). A note on the Loewenstein-Prelec theory of intertemporal choice. Mathematical Social Sciences, 52, 99-108.
4. Asheim, G. B. (1997). Individual and collective time-consistency. Review of Economic Studies, 64, 427-443.
5. Attema, A. E., Bleichrodt, H., Rohde, K. I. M., & Wakker, P. P. (2010). Time-tradeoff sequences for analyzing discounting and time inconsistency. Management Science (forthcoming).
6. Benzion, U., Rapoport, A., & Yagil, J. (1989). Discount rates inferred from decisions: An experimental study. Management Science, 35, 270-284.
7. Blavatskyy, P. R. (2006). Error propagation in the elicitation of utility and probability weighting functions. Theory and Decision, 60, 315-334.
8. Bleichrodt, H., & Johannesson, M. (2001). Time preference for health: A test of stationarity versus decreasing timing aversion. Journal of Mathematical Psychology, 45, 265-282.
9. Bleichrodt, H., & Miyamoto, J. (2003). A characterization of quality-adjusted life-years under cumulative prospect theory. Mathematics of Operations Research, 28, 181-193.
10. Bouyssou, D., & Pirlot, M. (2003). Nontransitive decomposable conjoint measurement. Journal of Mathematical Psychology, 46, 677-703.
11. Casari, M. (2009). Pre-commitment and flexibility in a time decision experiment. Journal of Risk and Uncertainty, 38, 117-141.
12. Cairns, J., & van der Pol, M. (2000). Valuing future private and social benefits: The discounted utility model versus hyperbolic discounting models. Journal of Economic Psychology, 21, 191-205.
13. Chabris, C. F., Laibson, D., Morris, C. L., Schuldt, J. P., & Taubinsky, D. (2008). Individual laboratory-measured discount rates predict field behavior. Journal of Risk and Uncertainty, 37, 237-269.
14. Chateauneuf, A. (1999). Comonotonicity axioms and rank-dependent expected utility theory for arbitrary consequences. Journal of Mathematical Economics, 32, 21-45.
15. Ebert, U. (2004). Social welfare, inequality, and poverty when needs differ. Social Choice and Welfare, 23, 415-448.
16. Eliaz, K., & Spiegler, R. (2006). Contracting with diversely naive agents. Review of Economic Studies, 73, 689-714.
17. Fishburn, P. C., & Rubinstein, A. (1982). Time preference. International Economic Review, 23, 677-694.
18. Green, L., Fristoe, N., & Myerson, J. (1994). Temporal discounting and preference reversals in choice between delayed outcomes. Psychonomic Bulletin and Review, 1, 383-389.
19. Gul, F., & Pesendorfer, W. (2005). The revealed preference theory of changing tastes. Review of Economic Studies, 72, 429-448.
20. Harris, C., & Laibson, D. (2001). Dynamic choices of hyperbolic consumers. Econometrica, 69, 935-957.
21. Harvey, C. M. (1995). Proportional discounting of future costs and benefits. Mathematics of Operations Research, 20, 381-399.
22. Harvey, C. M. (1986). Value functions for infinite-period planning. Management Science, 32, 1123-1139.
23. Karni, E. (2003). On the representation of beliefs by probabilities. Journal of Risk and Uncertainty, 26, 17-38.
24. Kinari, Y., Ohtake, F., & Tsutsui, Y. (2009). Time discounting: Declining impatience and interval effect. Journal of Risk and Uncertainty, 39, 87-112.
25. Kirby, K. N., & Marakovic, N. N. (1995). Modeling myopic decisions: Evidence for hyperbolic delay-discounting within subjects and amounts. Organizational Behavior and Human Decision Processes, 64, 22-30.
26. Krusell, P., & Smith, A. A. (2003). Consumption-savings decisions with quasi-geometric discounting. Econometrica, 71, 365-375.
27. Laibson, D. (1997). Golden eggs and hyperbolic discounting. Quarterly Journal of Economics, 112, 443-477.
28. Lancaster, K. (1963). An axiomatic theory of consumer time preference. International Economic Review, 4, 221-231.
29. Loewenstein, G., & Prelec, D. (1992). Anomalies in intertemporal choice: Evidence and an interpretation. Quarterly Journal of Economics, 107, 573-597.
30. Luttmer, E. G. J., & Mariotti, T. (2003). Subjective discounting in an exchange economy. Journal of Political Economy, 111, 1-30.
31. Mazur, J. E. (1987). An adjusting procedure for studying delayed reinforcement. In J. E. Mazur, M. L. Commons, J. A. Nevin, & H. Rachlin (Eds.), Quantitative analyses of behavior: The effect of delay and of intervening events on reinforcement value (Vol. 5, 55-73). Hillsdale, NJ: Erlbaum.
32. Mazur, J. E. (2001). Hyperbolic value addition and general models of animal choice. Psychological Review, 108, 96-112.
33. O'Donoghue, T., & Rabin, M. (1999). Doing it now or later. American Economic Review, 89, 103-124.
34. Onay, S., & Öncüler, A. (2007). Intertemporal choice under timing risk: An experimental approach. Journal of Risk and Uncertainty, 34, 99-121.
35. Peleg, B., & Yaari, M. E. (1973). On the existence of a consistent course of action when tastes are changing. Review of Economic Studies, 40, 391-401.
36. Phelps, E. S., & Pollak, R. A. (1968). On second-best national saving and game-equilibrium growth. Review of Economic Studies, 35, 185-199.
37. Pinto, J. L. (1997). Is the person trade-off a valid method for allocating health care resources? Health Economics, 6, 71-81.
38. Pollak, R. A. (1968). Consistent planning. Review of Economic Studies, 35, 201-208.
39. Prelec, D. (1998). The probability weighting function. Econometrica, 66, 497-527.
40. Prelec, D. (2004). Decreasing impatience: A criterion for non-stationary time preference and 'hyperbolic' discounting. Scandinavian Journal of Economics, 106, 511-532.
41. Read, D., & Read, N. L. (2004). Time discounting over the lifespan. Organizational Behavior and Human Decision Processes, 94, 22-32.
42. Rodriguez, M. L., & Logue, A. W. (1988). Adjusting delay to reinforcement: Comparing choice in pigeons and humans. Journal of Experimental Psychology: Animal Behavior Processes, 14, 105-117.
43. Rubinstein, A. (2003). 'Economics and psychology'? The case of hyperbolic discounting. International Economic Review, 44, 1207-1216.
44. Rubinstein, A. (2006). Dilemmas of an economic theorist. Econometrica, 74, 865-883.
45. Samuelson, P. A. (1937). A note on measurement of utility. The Review of Economic Studies, 4, 155-161.
46. Schmidt, U., & Zank, H. (2001). A new axiomatization of rank-dependent expected utility with tradeoff consistency for equally likely outcomes. Journal of Mathematical Economics, 35, 483-491.
47. Skiadas, C. (1997). Subjective probability under additive aggregation of conditional preferences. Journal of Economic Theory, 76, 242-271.
48. Strotz, R. H. (1956). Myopia and inconsistency in dynamic utility maximization. Review of Economic Studies, 23, 165-180.
49. Thaler, R. H. (1981). Some empirical evidence of dynamic inconsistency. Economics Letters, 8, 201-207.
50. Thaler, R. H., & Benartzi, S. (2004). Save more tomorrow: Using behavioral economics to increase employee saving. Journal of Political Economy, 112, 164-187.
51. Viscusi, W. K., Huber, J., & Bell, J. (2008). Estimating discount rates for environmental quality from utility-based choice experiments. Journal of Risk and Uncertainty, 37, 199-220.
52. Wakker, P. P., & Deneffe, D. (1996). Eliciting von Neumann-Morgenstern utilities when probabilities are distorted or unknown. Management Science, 42, 1131-1150.