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.
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Bibliographic InfoPaper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2010-09.
Date of creation: Sep 2010
Date of revision:
Other versions of this item:
- Maribeth Coller & Glenn W. Harrison & E. Elisabet Rutström, 2012. "Latent process heterogeneity in discounting behavior," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 375-391, April.
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-CBE-2010-09-11 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-09-11 (Experimental Economics)
- NEP-NEU-2010-09-11 (Neuroeconomics)
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