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

Read, D. and Frederick, S. and Orsel, B. and Rahaman, J. (2005) 'Four score and seven years from now : the date/delay effect in temporal discounting.', Management science., 51 (9). pp. 1326-1335.

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.

Item Type:Article
Keywords:Intertemporal choice, Framing effects, Decision making.
Full text:Full text not available from this repository.
Publisher Web site:http://dx.doi.org/10.1287/mnsc.1050.0412
Record Created:18 Aug 2008
Last Modified:31 Mar 2011 11:01

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