A Simple Axiomatization of Quasi-hyperbolic Discounting∗

This paper provides a novel axiomatization of quasi-hyperbolic discounting, which imposes consistency restrictions directly on the intertemporal tradeoffs. The experimental design proposed in this paper will be useful for experimental work since it renders the short-run discount factor elicitation independent of the utility function. This makes comparisons of impatience across a spectrum of different consumption goods possible within the same framework, thereby providing a valuable tool for empirically exploring this new dimension. ∗We thank David Dillenberger, Drew Fudenberg, Simon Grant, John Horton, David Laibson, Morgan MacClellon, Fabio Maccheroni, Yusufcan Masatlioglu, Jawwad Noor, Ben Polak, Michael Richter, and Larry Samuelson, as well as the audiences at Harvard and Yale, for their helpful comments. The usual disclaimer applies. Strzalecki gratefully acknowledges support by the NSF grant SES-1123729. This version: September 19, 2011. †Department of Economics, Harvard University. E-mail: [email protected] ‡Department of Economics, Harvard University. E-mail: tomasz [email protected].