The effect of a constant or a declining discount rate on optimal investment timing
This paper shows that exponential discounting may have an advancing effect on the timing of investment, not captured by sensitivity analysis carried out for the complete range of instantaneous discount rates implicit in declining discounting.
Volume (Year): 10 (2003)
Issue (Month): 10 ()
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- Martin L. Weitzman, 1998.
Harvard Institute of Economic Research Working Papers
1843, Harvard - Institute of Economic Research.
- Newell, Richard G. & Pizer, William A., 2003.
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- 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.
- Cropper, Maureen & Laibson, David, 1998. "The implications of hyperbolic discounting for project evaluation," Policy Research Working Paper Series 1943, The World Bank.
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