Pan, Jinrui

Webb, Craig

Zank, Horst

English

Liminal discounting, the model proposed here, generalises exponential discounting in a parsimonious way. It allows for well-known departures, whilst maintaining its elegance and tractability. A liminal discounter has a constant rate of time preference before and after some threshold time; the liminal point. If the liminal point is an absolute point in time, liminal discounting captures time consistent behaviour. If it is expressed in relative time, liminal discounting captures time invariant behaviour. We provide preference foundations for all cases, showing how the liminal point is derived endogenously from behaviour. We give applications to Rubinstein bargaining games, showcasing the model’s use in microeconomic theory

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Discounting the Subjective Present and Future

https://pure.manchester.ac.uk/ws/files/38535851/FULL_TEXT.pdf

Discounting the Subjective Present and Future

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The University of Manchester - Institutional Repository