The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing
AbstractThis paper shows that exponential discounting may have anadvancing effect on the timing of investment, not captured bysensitivity analysis carried out for the complete range of instantaneous discount rates implicit in declining discounting.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 227.
Date of creation: 2002
Date of revision:
Publication status: Published as "The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing", Journal of Applied Economics Letters, Volume 10, Number 10, 2003.
Declining discounting; exponential discounting; hyperbolic discounting; investment timing; project evaluation;
Other versions of this item:
- Gonzalo Edwards, 2003. "The effect of a constant or a declining discount rate on optimal investment timing," Applied Economics Letters, Taylor & Francis Journals, vol. 10(10), pages 657-659.
- D90 - Microeconomics - - Intertemporal Choice - - - General
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cropper, Maureen & Laibson, David, 1998. "The implications of hyperbolic discounting for project evaluation," Policy Research Working Paper Series 1943, The World Bank.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- Pizer, William & Newell, Richard, 2000.
"Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?,"
dp-00-45, Resources For the Future.
- Newell, Richard G. & Pizer, William A., 2003. "Discounting the distant future: how much do uncertain rates increase valuations?," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 52-71, July.
- Martin L. Weitzman, 1998.
Harvard Institute of Economic Research Working Papers
1843, Harvard - Institute of Economic Research.
- Joseph Eisenhauer & Luigi Ventura, 2006. "The prevalence of hyperbolic discounting: some European evidence," Applied Economics, Taylor & Francis Journals, vol. 38(11), pages 1223-1234.
- Gonzalo Edwards, 2002. "La Tasa de Descuento en Proyectos de Largo Plazo," Documentos de Trabajo 231, Instituto de Economia. Pontificia Universidad Católica de Chile..
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