32 research outputs found
Time Discounting and Time Consistency
Time discounting is the phenomenon that a desired result in the
future is perceived as less valuable than the same result now.
Economic theories can take this psychological fact into account in
several ways. In the economic literature the most widely used type
of additive time discounting is {\em exponential discounting}. In
exponential discounting, the fall of valuation depends by a constant
factor on the length of the delay period. It is well known,
however, that exponential time discounting often does not describe
well how people actually behave. Most people are averse to short
delays in gratification now, while their future selves may not mind
a bit of extra waiting. This behaviour can be described well by
non-exponential discounting functions such as {\em hyperbolic
discounting}. In hyperbolic discounting, valuations fall rapidly
for small delay periods, but the fall gets slower for longer delay
periods. Hyperbolic discounting captures phenomena such as
procrastination, addiction and in general inconsistency over
time. This chapter investigates whether forms of non-exponential
discounting, in particular close to the so called Quasi-Hyperbolic
model, could also be characterized in terms of dynamically
consistent choices when individuals discount the welfare of future
selves as well as their payoffs
Generalized monotonicity analysis
Aggregation, Comparative statics, Comparative dynamics, Monotone comparative statics, Parameterized equations, Parameter transformation, Quantitative monotonicity analysis, Robust inference, Supermodular games, C61, C43, C72, D11,