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A Note On The Loewenstein-Prelec Theory Of Intertemporal Choice

By Ali al-Nowaihi and Sanjit Dhami


In one of the major contributions to behavioral economics, Loewenstein and Prelec (1992) set the foundations for the behavioral approach to decision making over time. We correct a number of errors in Loewenstein and Prelec (1992). Furthermore, we provide a correct, more direct and simpler derivation of their generalized hyperbolic discounting formula that has formed the basis of much recent work on temporal choice

Topics: Anomalies of the DU model, Generalized hyperbolic discounting, Intertemporal choice
Publisher: Dept. of Economics, University of Leicester
Year: 2005
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