Costs and benefits in the distant future have little consequence today when valued with conventional discount rates. This is particularly relevant for assessing policies with effects hundreds of years in the future, such as mitigating the damages from global warming. Many authors and analysts have responded by arguing for the use of lower discount rates over longer horizons, based primarily on ...

When the time preference exhibits decreasing marginal impatience, the rate at which the discount function decreases plays a central role in the stability analysis. This paper shows that if the discount function is strictly decreasing, strictly convex and has a uniform bound on its first derivative, then the continuous-time, one-sector optimal growth problem has a unique steady state that exhibi...

Supplier selection and material procurement planning are the most important issues in supply chain management. This decision is complicated when the buyers face with discount price schemes. In real situation, each supplier may apply different methods such as different types of discount schedules and various types of payment in order to increase market share. In this situation, buyers try to sel...

In this short paper we prove that the classic simplex method with the mostnegative-reduced-cost pivoting rule (Dantzig 1947) for solving the Markov decision problem (MDP) with a fixed discount rate is a strongly polynomial-time algorithm. The result seems surprising since this very pivoting rule was shown to be exponential for solving a general linear programming (LP) problem, and the simplex (...

We provide novel evidence on which theories best explain stock return anomalies by decomposing anomaly portfolio returns into components driven by the underlying …rms’cash ‡ows or their discount rates. For each of …ve well-known anomalies, we …nd that cash ‡ow shocks explain more variation in anomaly portfolio returns than discount rate shocks. The cash ‡ow and discount rate components of each ...

For two independent principles of intergenerational equity, the implied discount rate equals the growth rate of real per-capita income, say 2%, thus falling right into the range suggested by the U.S. Office of Management and Budget. To prove this, we develop a simple tool to evaluate small policy changes affecting several generations, by reducing the dynamic problem to a static one. A necessary...

The use of a constant discount rate to study long-lived environmental problems such as global warming has two disadvantages: the prescribed policy is sensitive to the discount rate, and with moderate discount rates, large future damages have almost no effect on current decisions. Timeconsistent quasi-hyperbolic discounting alleviates both of these modeling problems, and is a plausible descripti...

For two independent principles of intergenerational equity, the implied discount rate equals the growth rate of real percapita income, say 2%, thus falling right into the range suggested by the U.S. Office of Management and Budget. To prove this, we develop a simple tool to evaluate small policy changes affecting several generations, by reducing the dynamic problem to a static one. A necessary ...

Determining Consumers’ Discount Rates With Field Studies Because utility/profits, state transitions and discount rates are confounded in dynamic models, discount rates are typically fixed to estimate the other two factors. Yet these rate choices, if misspecified, generate poor forecasts and policy prescriptions. Using a field study wherein cellphone users transitioned from a linear to three-par...