This paper provides an axiomatic foundation for a particular type of preference shock model, called the random discounting representation, where a decision maker believes that her discount factors change randomly over time. For this purpose, we formulate an infinite horizon extension of Dekel, Lipman, and Rustichini (2001), and identify the behavior that reduces all the subjective uncertainties...

We consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer. The manufacturer is the Stackelberg leader and the retailer is the follower.We examine how themanufacturer can contract awholesale-price-only agreementwith its retailer thatmaximizes its profit.We also propose a returns policy with a wholesale-price-discount scheme (returns-discount contract) that...

Nearly all discussions about the appropriate consumption discount rate for climate-change policy evaluation assume that a single discount rate concept applies. We argue that two distinct concepts and associated rates apply. We distinguish a social-welfare-equivalent discount rate (rSW) appropriate for determining whether a given policy would augment social welfare (according to a postulated soc...

This paper derives the properties of the discount rate that should be applied to a public-sector project when the affected population has heterogeneous degrees of impatience. We show that, for any distribution of discount rates, the social discount rate has the following properties: it decreases over time, it is lower than the average of the discount rates in the population and, it converges to...

We discuss a quantity discount problem between a seller (wholesaler) and a buyer (retailer). The seller purchases products from an upper-leveled supplier (manufacturer) and then sells them to the buyer who faces her/his customers’ demand. The seller attempts to increase her/his profit by controlling the buyer’s order quantity through a quantity discount strategy and the buyer tries to maximize ...

Desharnais, Gupta, Jagadeesan and Panangaden introduced a family of behavioural pseudometrics for probabilistic transition systems. These pseudometrics are a quantitative analogue of probabilistic bisimilarity. Distance zero captures probabilistic bisimilarity. Each pseudometric has a discount factor, a real number in the interval (0, 1]. The smaller the discount factor, the more the future is ...

From monetary policies to the climate change problem, from the burden of private credit card debts to the evaluation of public projects, discount rate is the central issue, yet there is little clear understanding about the nature of discounting. In this paper, applying a newly developed production theory, we discuss how discount rate is related to other factors in social systems, such as risk, ...

We thank the editor and an anonymous referee. Any errors are our own. Abstract Using the WACC to Value Real Options We present a real option valuation using the weighted average cost of capital (WACC). This is an alternative to risk-neutral real option valuation. Using the WACC involves a marginal increase in mathematical complexity, but it is easy to implement in a spreadsheet, and it is easy ...

In this paper a model is proposed for distribution centers location and joint replenishment of a distribution system that is responsible for orders and product delivery to distribution centers. This distribution centers are under limitedwarehouse space and this can determine amount of requirement product by considering proposed discount.The proposed model is develop to minimize total costs cons...

In this research, an integrated supplier-buyer inventory system is studied when market demand is price-sensitive trapezoidal and units in inventory are subject to deterioration at a constant rate. The buyer has an option to choose between discount in unit price and delay in settling the account against the purchases made offered by the supplier. This type of trade credit is termed as ‘net credi...