Can a generation’s discounting of future generations’ consumption utilities be interpreted as “pure” altruism towards future generations, that is, a concern that these are better off according to their likewise forward-looking preferences? It turns out that the answer is positive for many but not all discount functions used in the economics literature. In particular, traditional exponential dis...

We elicit measures of individual discount rates from a representative sample of the Danish population and test two substantive hypotheses. The first hypothesis is that smokers have higher individual discount rates than non-smokers. The second hypothesis is that smokers are more likely to have time inconsistent preferences than non-smokers, where time inconsistency is indicated by a hyperbolic d...

Human beings are conditioned and designed by society to relate high degree of uncertainty to future. Several behavioral studies have demonstrated that the phenomenon of attaching hazard rate to future events is consistent across habits related to food, drugs, exercising, impulsive shopping and saving money. A person, when planning for long term would think about health and monetary benefits ari...

This paper examines a dynamic model of nonlinear income taxation in which the government cannot commit to its future tax policy, and individuals are quasihyperbolic discounters who cannot commit to future consumption plans. The government has both paternalistic and redistributive objectives, and therefore uses its taxation powers to maximize a utilitarian social welfare function that reflects i...

* Breakdown* of*Will is presented as a model of decision making that is based on two interrelated phenomena, “hyperbolic discounting” and “intertemporal bargaining”. These are interesting phenomena, and I would have enjoyed reading about them in a theoretical review paper, but they did not make for a good book about decision making. The phenomena are not actually linked together into a coherent...

Despite the high value that internet users place on privacy, they offer their personal information for low compensations. This behavior, known as the privacy paradox, has been explained by a stream of literature with different behavioral biases, and in particular with hyperbolic discounting. However, economics offers two possible reasons to discount payoffs—costs of waiting and hazard rates—whi...

This paper makes explicit the links between preferences over lotteries on length of life and intertemporal choice. I show that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to the length of life. Relaxing such an assumption leads us to develop a more general formulation of lifetime utility ...

This paper extends the literature on consumer reactions to future price changes to a new context – markets with substantial repeat purchase behavior – where the efficacy of common dynamic pricing strategies turns on the strength of these reactions. Utilizing the unique discount structure in automobile insurance, I am able to measure the extent to which consumers react to changes in the future p...