"Hyperbolic discount functions are characterized by a relatively high discount rate over short horizons and a relatively low discount rate over long horizon" [Laibson 1997, p. 445]. In this theoretical note, we show that individuals hyperbolically discount marginal utility from money when they follow a cognitive procedure in which they believe that their wealth might increase or decrease in each future period under the constraint of a small-perceived probability that wealth will deteriorate below its current level.
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Paper provided by Tel Aviv in its series Papers with number
2000-25.
Find related papers by JEL classification: D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
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