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A note on the relevance of the q-exponential function in the context of intertemporal choices

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  • Cajueiro, Daniel O.

Abstract

This paper shows that the q-exponential function well known in the deformed algebra inspired in the Tsallis's nonextensive thermodynamics may be used to model discount functions in intertemporal choices which present the phenomenon known as increasing patience. Moreover, we show that this insight may also be used to provide a measure of the degree of dynamic inconsistency presented in such decisions.

Suggested Citation

  • Cajueiro, Daniel O., 2006. "A note on the relevance of the q-exponential function in the context of intertemporal choices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 364(C), pages 385-388.
    • Handle: RePEc:eee:phsmap:v:364:y:2006:i:c:p:385-388
    DOI: 10.1016/j.physa.2005.08.056
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    References listed on IDEAS

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    1. Keller, L Robin & Strazzera, Elisabetta, 2002. "Examining Predictive Accuracy Among Discounting Models," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 143-160, March.
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