The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing
This paper shows that exponential discounting may have anadvancing effect on the timing of investment, not captured bysensitivity analysis carried out for the complete range of instantaneous discount rates implicit in declining discounting.
|Date of creation:||2002|
|Date of revision:|
|Publication status:||Published as "The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing", Journal of Applied Economics Letters, Volume 10, Number 10, 2003.|
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- Newell, Richard G. & Pizer, William A., 2003.
"Discounting the distant future: how much do uncertain rates increase valuations?,"
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- Pizer, William & Newell, Richard, 2000. "Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?," Discussion Papers dp-00-45, Resources For the Future.
- Martin L. Weitzman, 2001.
American Economic Review,
American Economic Association, vol. 91(1), pages 260-271, March.
- Martin L. Weitzman, 1998. "Gamma Discounting," Harvard Institute of Economic Research Working Papers 1843, Harvard - Institute of Economic Research.
- 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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