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A comparison of intertemporal choices for oneself versus someone else based on Tsallis’ statistics

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  • Takahashi, Taiki

Abstract

Impulsivity and inconsistency in intertemporal choice (discounting) have drawn attention in econophysics and neuroeconomics. Although it is well established that most people often show irrational discounting (e.g., hyperbolic discounting), little is known regarding whether the irrationality is mitigated or not, when the choice was performed by someone else instead of subject herself. This point is important for economic policy-making. In order to compare consistency and impulsivity in choices for oneself versus someone else, we experimentally estimated the consistency parameter q in Tsallis’ statistics-based discount function for oneself and someone else, by assessing the points of subjective equality (indifference points) at 7 delays (1 week to 25 years) in humans. We observed that (i) most people are more inconsistent when the outcomes of intertemporal choice are only relevant to someone else (q=−8.89) than when relevant to oneself (q=−2.63), and (ii) impulsivity, distinguished from inconsistency by utilizing the Tsallis statistics-based q-exponential discount function, is also larger in the choice for someone else than for oneself. Our results indicate that (i) leaving decision-making processes with some others may neither reduce impulsivity nor correct inconsistency and (ii) when q-exponential discounting is utilized, the definition range of q-parameter should be extended to q<0, and smaller (q<1) and larger (q>1) values indicate more inconsistent discounting. Together, the usefulness of the q-exponential discounting for analyzing the dynamic consistency of economic policy was demonstrated in the present study.

Suggested Citation

  • Takahashi, Taiki, 2007. "A comparison of intertemporal choices for oneself versus someone else based on Tsallis’ statistics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 385(2), pages 637-644.
  • Handle: RePEc:eee:phsmap:v:385:y:2007:i:2:p:637-644
    DOI: 10.1016/j.physa.2007.07.020
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    References listed on IDEAS

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    1. Takahashi, Taiki & Oono, Hidemi & Radford, Mark H.B., 2007. "Empirical estimation of consistency parameter in intertemporal choice based on Tsallis’ statistics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 381(C), pages 338-342.
    2. Johansen, Anders, 2004. "Probing human response times," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 338(1), pages 286-291.
    3. Chessa, Antonio G. & Murre, Jaap M.J., 2004. "A memory model for internet hits after media exposure," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 333(C), pages 541-552.
    4. Cajueiro, Daniel O., 2006. "A note on the relevance of the q-exponential function in the context of intertemporal choices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 364(C), pages 385-388.
    5. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
    6. Taizo Motonishi, 2004. "Dynamic Inconsistency In The Public Supply Of Liquidity," The Japanese Economic Review, Japanese Economic Association, vol. 55(4), pages 401-417.
    7. 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.
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    Citations

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    Cited by:

    1. Takahashi, Taiki & Oono, Hidemi & Radford, Mark H.B., 2008. "Psychophysics of time perception and intertemporal choice models," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(8), pages 2066-2074.
    2. Lu, Yang & Zhuang, Xintian, 2014. "The impact of gender and working experience on intertemporal choices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 409(C), pages 146-153.
    3. Cruz Rambaud, Salvador & Muñoz Torrecillas, María José, 2013. "A generalization of the q-exponential discounting function," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(14), pages 3045-3050.
    4. Destefano, Natália & Martinez, Alexandre Souto, 2011. "The additive property of the inconsistency degree in intertemporal decision making through the generalization of psychophysical laws," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(10), pages 1763-1772.
    5. Lu, Yang & Wu, Dongmei & Zhuang, Xintian, 2016. "Part-whole bias in intertemporal choice: An empirical study of additive assumption," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 231-235.
    6. Martinez, Alexandre Souto & González, Rodrigo Silva & Terçariol, César Augusto Sangaletti, 2008. "Continuous growth models in terms of generalized logarithm and exponential functions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(23), pages 5679-5687.
    7. Han, Ruokang & Takahashi, Taiki, 2012. "Psychophysics of time perception and valuation in temporal discounting of gain and loss," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(24), pages 6568-6576.
    8. repec:eee:phsmap:v:490:y:2018:i:c:p:250-259 is not listed on IDEAS
    9. Takahashi, Taiki, 2009. "Tsallis’ non-extensive free energy as a subjective value of an uncertain reward," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(5), pages 715-719.
    10. Takahashi, Taiki, 2010. "A social discounting model based on Tsallis’ statistics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(17), pages 3600-3603.

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