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Non-hyperbolic discounting and dynamic preference reversal

Author

Listed:
  • Shou Chen

    (Business School of Hunan University)

  • Richard Fu

    (University of Alabama at Birmingham)

  • Lei Wedge

    (University of South Florida)

  • Ziran Zou

    (Business School of Hunan University)

Abstract

In this paper, we present a time-varying and non-stationary but non-hyperbolic discount function that explains dynamic preference reversal. The new discount function emerges from an analysis of intertemporal consumption and savings choices with mortality risk and an altruistic factor. Our analysis shows that the process of updating survival information may also account for dynamic preference reversal.

Suggested Citation

  • Shou Chen & Richard Fu & Lei Wedge & Ziran Zou, 2019. "Non-hyperbolic discounting and dynamic preference reversal," Theory and Decision, Springer, vol. 86(2), pages 283-302, March.
    • Handle: RePEc:kap:theord:v:86:y:2019:i:2:d:10.1007_s11238-018-09683-3
    DOI: 10.1007/s11238-018-09683-3
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