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Four score and seven years from now: the date/delay effect in temporal discounting

Read, D.; Frederick, S.; Orsel, B.; Rahaman, J.

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Authors

D. Read

S. Frederick

B. Orsel

J. Rahaman



Abstract

According to most models of intertemporal choice, an agent's discount rate is a function of how far the outcomes are removed from the present, and nothing else. This view has been challenged by recent studies, which show that discount rates tend to be higher the closer the outcomes are to one another (subadditive discounting) and that this can give rise to intransitive intertemporal choice. We develop and test a generalized model of intertemporal choice, the Discounting By Intervals (DBI) model, according to which the discount rate is a function of both how far outcomes are removed from the present and how far the outcomes are removed from one another. The model addresses past challenges to other models, most of which it includes as special cases, as well as the new challenges presented in this paper: Our studies show that when the interval between outcomes is very short, discount rate tends to increase with interval length (superadditive discounting). In the discussion we place our model and evidence in a broader theoretical context.

Citation

Read, D., Frederick, S., Orsel, B., & Rahaman, J. (2005). Four score and seven years from now: the date/delay effect in temporal discounting. Management Science, 51(9), 1326-1335. https://doi.org/10.1287/mnsc.1050.0412

Journal Article Type Article
Publication Date Sep 1, 2005
Deposit Date Aug 18, 2008
Publicly Available Date Sep 22, 2014
Journal Management Science
Print ISSN 0025-1909
Electronic ISSN 1526-5501
Publisher Institute for Operations Research and Management Sciences
Peer Reviewed Peer Reviewed
Volume 51
Issue 9
Pages 1326-1335
DOI https://doi.org/10.1287/mnsc.1050.0412
Keywords Intertemporal choice, Framing effects, Decision making.
Public URL https://durham-repository.worktribe.com/output/1589534

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