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Are risk attitude, impatience, and impulsivity related to the individual discount rate? Evidence from energy-efficient durable goods

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  • Sébastien Foudi

    (Basque Centre for Climate Change (BC3))

Abstract

Discounting is a manifestation of behavioral impulsivity, which is closely related to self-regulation processes. The decision-making process for intertemporal choices is governed by the inhibition of impulses, which can influence both risk and time-related attitudes. This paper utilizes self-reported measures of risk, impatience, and impulsivity attitudes to examine their impact on the implicit discount rate used when weighing the current purchase cost against future energy savings of appliances. It analyzes and tests the interplay between these attitudes using specific functional forms and causal models. The results highlight the role of risk, impatience and impulsivity on the discount rate and the biases that arise from omitting impulsive attitudes. In addition, other factors such as environmental and social preferences, attitudes, and financial constraints contribute to the implicit discount rate.

Suggested Citation

  • Sébastien Foudi, 2024. "Are risk attitude, impatience, and impulsivity related to the individual discount rate? Evidence from energy-efficient durable goods," Theory and Decision, Springer, vol. 96(4), pages 627-661, June.
    • Handle: RePEc:kap:theord:v:96:y:2024:i:4:d:10.1007_s11238-023-09961-9
    DOI: 10.1007/s11238-023-09961-9
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