In this paper we ask whether the US government should replace its current discounting practices with a declining discount rate schedule, as the UK and France have done, or should continue to discount the future at a constant exponential rate. To address the question, we briefly present the theoretical basis for a declining discount rate (DDR) schedule, but focus on how, in practice, a DDR could...

Using data from reorganization proposals filed by bankrupt Canadian firms, we estimate the discount rate implicit in the creditors’ reorganization decision. Using two approaches, a grid-search and an optimization algorithm, we estimate the implicit monthly discount rate in reorganization to be around 5 percent, which corresponds to an annual discount rate of 87 percent.

A possibly immortal agent tries to maximise its summed discounted rewards over time, where discounting is used to avoid infinite utilities and encourage the agent to value current rewards more than future ones. Some commonly used discount functions lead to time-inconsistent behavior where the agent changes its plan over time. These inconsistencies can lead to very poor behavior. We generalise t...

This paper discusses the incentive to bundle when consumer valuations are nonadditive and/or when products are supplied by separate sellers. Whether integrated or separate, firms have an incentive to introduce a bundle discount when demand for the bundle is elastic relative to demand for stand-alone products. A simple formula is derived for when an integrated firm supplying substitute products ...

Coordinating activities among members of a distribution channel has been a subject of great attention in the past two decades. Among various methods to coordinate independent channel members, a number of studies in the literature suggest quantity discount as a mechanism to achieve incentive-compatible coordination between a manufacturer and his retailer. The rationale behind this coordination m...

It has been suggested that the long-term discount rate for environmental goods should decrease at longer delays. One justification for this suggestion is that human judgments support it. This article presents an experiment showing that judgments concerning discount rates are internally inconsistent. These results point to potential problems with the use of judgments referenda for determining di...

To justify substantial carbon emission reductions, recent literature on cost-benefit analysis of climate change suggests discounting environmental quality at a lower discount rate than the standard consumption discount rate. Recent literature also shows that a theoretical foundation for such a lower environmental discount rate requires rising willingness-to-pay for environmental quality (WTP). ...

A discount may be defined by the location in which, and frame by which, it is communicated. Discount framing, particularly the differences etween cents-off and percentage-off discounts, has been widely studied. Discount location (e.g., proximate to or distal from regular price info) has eceived considerably less attention. We employ the proximity-compatibility principle and tenets of human memo...

Discount rates are often used in cost-benefit analysis. Whenever costs and benefits for a household or individual are spread over time, it is essential that one calculate present-value equivalents in order to undertake meaningful comparisons. In most cases welfare analysts use market rates as the basis for these present-value calculations. Sensitivity analysis often consists of varying the scal...