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A representation of time discounting

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  • Heilmann, Conrad

Abstract

The concept of time discounting introduces weights on future goods to make these less valu- able. Famously, both the specic functional form of time discounting and its normative sta- tus are contested. To address these problems, this paper provides a measurement-theoretic framework of representation for time discounting. The general representation theorem char- acterises time discounting factors as ratio-scale representations of dierences in temporally extended prospects. This framework of representation is used to reconsider interpretations of time discounting factors such as time preferences, uncertainty and preference change. It also allows to compare these interpretations with regards to their normative appeal, the kinds of reductionism regarding time and preference they imply and the specic functional form of time discounting they suggest. Farther, multiple-self interpretations of decision-makers become available, such that a time discounting factor represents the degree of connectedness between temporal selves in a person.

Suggested Citation

  • Heilmann, Conrad, 2008. "A representation of time discounting," LSE Research Online Documents on Economics 23858, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:23858
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    File URL: http://eprints.lse.ac.uk/23858/
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    References listed on IDEAS

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    1. Fishburn, Peter C & Rubinstein, Ariel, 1982. "Time Preference," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 677-694, October.
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    3. Gollier, Christian, 2002. "Discounting an uncertain future," Journal of Public Economics, Elsevier, vol. 85(2), pages 149-166, August.
    4. Charles Noussair & Ping Wu, 2006. "Risk tolerance in the present and the future: an experimental study," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 401-412.
    5. Broome, John, 2006. "Weighing Lives," OUP Catalogue, Oxford University Press, number 9780199297702.
    6. George Wu, 1999. "Anxiety and Decision Making with Delayed Resolution of Uncertainty," Theory and Decision, Springer, vol. 46(2), pages 159-199, April.
    7. Manzini, Paola & Mariotti, Marco, 2007. "Choice Over Time," IZA Discussion Papers 2993, Institute for the Study of Labor (IZA).
    8. Broome,John, 1999. "Ethics out of Economics," Cambridge Books, Cambridge University Press, number 9780521642750, March.
    9. 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.
    10. George Loewenstein & Drazen Prelec, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 573-597.
    11. Ok, Efe A. & Masatlioglu, Yusufcan, 2007. "A theory of (relative) discounting," Journal of Economic Theory, Elsevier, vol. 137(1), pages 214-245, November.
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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