At first glance, it seems to make sense to conclude that when a 1 dollar reward tomorrow is equivalent to a D < 1 dollar reward today, the day-after-tomorrow’s 1 dollar reward would be equivalent to D ·D = D dollars today, and, in general, a reward after time t is equivalent to D(t) = D dollars today. This exponential discounting function D(t) was indeed proposed by the economists, but it does ...

Despite recent interest in hyperbolic discounting, there has been little discussion of exactly what property of time preferences is instantiated by hyperbolic or quasi-hyperbolic functional forms. The paper revives an earlier proposal in Prelec (1989) that the key property is Pratt– Arrow convexity of the log of the discount function, which corresponds to decreasing impatience (DI) at the level...

BACKGROUND Temporal discounting is an important determinant of many health and financial outcomes, but we are not aware of studies that have examined the association of temporal discounting with mortality. METHODS Participants were 406 older persons without dementia from the Rush Memory and Aging Project, a longitudinal cohort study of aging. Temporal discounting was measured using standard p...

This research looks into the possibility of bringing together two distinct and empirically successful areas of behavioural economics; regret aversion and quasi-hyperbolic discounting. Standard regret aversion theory (Loomes and Sugden 1982, Bell 1982) operates in a world of uncertainty, where regret aversion arises due to the possibility of, having made an initial choice, a more preferable opti...

This paper deals with hyperbolic discounting in a macro context. Time consistency is discussed in terms of rational behavior and rational expectations. The theory is applied to the intertemporal consumption decision in order to explain undersaving in an economy. Moreover, possible implications on policy makers’ decisions on reforms and budget deficits are evinced. Finally, the Ricardian equival...

In the study of decision making under risk, preferences are assumed to be continuous. We present a model of discontinuous preferences over certain and uncertain outcomes. Using existing parameter estimates for certain and uncertain utility, five important decision theory phenomena are discussed: the certainty effect, experimentally observed probability weighting, the uncertainty effect, extreme...

The Quantum Decision Theory (QDT) developed recently by the authors is applied to clarify the role of risk and uncertainty in decision making and in particular in relation to the phenomenon of dynamic inconsistency. By formulating this notion in precise mathematical terms, we distinguish three types of inconsistency: time inconsistency, planning paradox, and inconsistency occurring in some disc...

Impulsivity and loss of self-control in drug-dependent patients have been associated with the manner in which they discount delayed rewards. Although drugs of abuse have been shown to modify perceived time-duration, little is known regarding the relationship between impulsive decision-making in intertemporal choice and estimation of time-duration. In classical economic theory, it has been hypot...

The present, subjective value of a reinforcer typically decreases as a function of the delay to its receipt, a phenomenon termed delay discounting. Delay discounting, which is assumed to reflect impulsivity, is hypothesized to play an important role in drug abuse. The present study examined delay discounting of cocaine injections by rhesus monkeys. Subjects were studied on a discrete-trials tas...