Ten dollars today is more attractive than the same amount of money tomorrow and is consistent with the well known proverb, “a bird in the hand is worth two in the bush.” We all know that the value of a reward is discounted over time. How the value discounts over time and what is the rationale for such discounting, however, is less clear. Classical economic theory has assumed an exponential form...

Abstract: Behavior analytic discussions of self-control have focused on temporal discounting as the primary index of selfcontrol behavior. In this measure, choice between discrete, mutually exclusive, delayed outcomes is observed. The outcome of this self-control measure is well described by hyperbolic models of intertemporal choice. In the last ten years, a second measure of self-control has b...

The tendency to make unhealthy choices is hypothesized to be related to an individual's temporal discount rate, the theoretical rate at which they devalue delayed rewards. Furthermore, a particular form of temporal discounting, hyperbolic discounting, has been proposed to explain why unhealthy behavior can occur despite healthy intentions. We examine these two hypotheses in turn. We first syste...

Experimental and field research has shown that individuals often exhibit time inconsistent preferences. Often this is in the direction of “hyperbolic” or quasi-hyperbolic discounting. That is, individuals have a steeper discount rate for a given delay length when that delay comes sooner. This paper presents an experiment that tests this hypothesis with a novel choice task. Instead of being aske...

If decision makers have exclusive rights to particular investment projects, they frequently have the opportunity to delay these investments. This paper analyzes the effect of quasi-hyperbolic discounting, i.e. timeinconsistent preferences on the exercise timing of such options to defer an investment. It complements earlier work on this issue covering risk aversion and capital market interaction...

The paper surveys over twenty models of delay discounting (also known as temporal discounting, time preference, time discounting), that psychologists and economists have put forward to explain the way people actually trade off time and money. Using little more than the basic algebra of powers and logarithms, I show how the models are derived, what assumptions they are based upon, and how differ...

On average, young people underestimate whereas old people overestimate their chances to survive into the future. We employ a subjective survival belief model proposed by Ludwig and Zimper (2013) which can replicate these patterns. The model is compared with hyperbolic discounting within a standard life-cycle setting of consumption and savings. We show theoretically that the first order conditio...

The tendency to foreshorten time units as we peer further into the future provides an explanation for hyperbolic discounting at an inter-generational time scale. We study implications of hyperbolic discounting for climate change policy, when the probability of a climate-induced catastrophe depends on the stock of greenhouse gasses. We characterize the set of Markov perfect equilibria (MPE) of t...

In this paper we elicit preferences for discounting via experimental techniques. We then estimate a general speci…cation of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasihyperbolic discounting. The data strongly favor a speci…cation with a small present bias in the form of a …xed cost, of the order of $4 on average across...