Latent process heterogeneity in discounting behavior
AbstractWe show that observed choices in discounting experiments are consistent with roughly one-half of the subjects using exponential discounting and one-half using quasi-hyperbolic discounting. We characterize the latent data generating process using a mixture model which allows different subjects to behave consistently with each model. Our results have substantive implications for the assumptions made about discounting behavior, and also have significant methodological implications for the manner in which we evaluate alternative models when there may be complementary data generating processes. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 64 (2012)
Issue (Month): 2 (April)
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Other versions of this item:
- Maribeth Coller & Glenn W. Harrison & E. Elisabet RutstrÃ¶m, 2010. "Latent Process Heterogeneity in Discounting Behavior," Experimental Economics Center Working Paper Series, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University 2010-09, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
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