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Interpreting Time Horizon Effects in Inter-Temporal Choice

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  • Thomas Dohmen
  • Armin Falk
  • David Huffman
  • Uwe Sunde

Abstract

We compare different designs that have been used to test for an impact of time horizon on discounting, using real incentives and two representative data sets. With the most commonly used type of design we replicate the typical finding of declining (hyperbolic) discounting, but with other designs find constant or increasing discounting. As a whole, the data are not consistent with any of these usual candidate discounting assumptions, and they also imply a violation of transitivity. The results have implications for interpreting previous evidence, and pose an important puzzle for understanding inter-temporal choice.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-02/cesifo1_wp3750.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3750.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3750

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Keywords: time preference; hyperbolic discounting; self-control; dynamic inconsistency; intransitivity;

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Cited by:
  1. Vischer, Thomas & Dohmen, Thomas & Falk, Armin & Huffman, David & Schupp, Jürgen & Sunde, Uwe & Wagner, Gert G., 2013. "Validating an Ultra-Short Survey Measure of Patience," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 142-145.

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