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Sign-dependence in intertemporal choice

Author

Listed:
  • Mohammed Abdellaoui

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Han Bleichrodt

    (Erasmus School of Economics - Erasmus University Rotterdam, Department of Applied Economics - Erasmus University Rotterdam)

  • Olivier L’haridon

    (IUF - Institut universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche, GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

Allowing for sign-dependence in discounting substantially improves the description of people's time preferences. The deviations from constant discounting that we observed were more pronounced for losses than for gains. Our data also suggest that the discount function should be flexible enough to allow for increasing impatience. These findings challenge the current practice in modeling intertemporal choice where sign-dependence is largely ignored and only decreasing impatience is allowed. The sign-dependent model of Loewenstein and Prelec (1992) with the constant sensitivity discount function of Ebert and Prelec (2007) provided the best fit to our data.

Suggested Citation

  • Mohammed Abdellaoui & Han Bleichrodt & Olivier L’haridon, 2013. "Sign-dependence in intertemporal choice," Post-Print halshs-00846590, HAL.
    • Handle: RePEc:hal:journl:halshs-00846590
    DOI: 10.1007/s11166-013-9181-9
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    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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