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Another Experimental Look at Individual Time Preference

Author

Listed:
  • JAMES H. HOLCOMB

    (University of Texas at El Paso)

  • PAUL S. NELSON

    (Northeast Louisiana University)

Abstract

The axiomatic models of intertemporal choice assume that an individual's rate of time discount is constant. Yet a great deal of anecdotal and hypothetical evidence suggests that the discount rate is instead hyperbolic. Likewise, animal studies have also supported the hyperbolic discount rate. Very little empirical evidence exists using human subjects making salient choices. Using experimental economic methodology, support is found for the stationarity component of the discount rate assumption but not for the linearity component .

Suggested Citation

  • James H. Holcomb & Paul S. Nelson, 1992. "Another Experimental Look at Individual Time Preference," Rationality and Society, , vol. 4(2), pages 199-220, April.
    • Handle: RePEc:sae:ratsoc:v:4:y:1992:i:2:p:199-220
    DOI: 10.1177/1043463192004002006
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    References listed on IDEAS

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    1. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    2. Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 181-193, Fall.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
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