Author
Listed:
- Jess Benhabib
- Alberto Bisin
Abstract
A vast empirical evidence in experimental psychology on time discounting has documented various behavioral anomalies which cast doubts on the empirical support for exponential discounting, to date the most widely used assumption on time preference in economic theory. The most important of such anomalies, called ''reversal of preferences,'' has been interpreted to suggest that agents have a preference, a bias in fact, for present consumption which cannot be rationalized by preferences with exponential discounting. Psychologists (e.g., Herrnstein, 1961, de Villiers-Herrnstein, 1976, Ainsle-Herrnstein, 1981; see also Ainsle, 1992, 2001) and, most recently, behavioral economists (e.g., Elster, 1979, Laibson, 1996, O'Donoghue-Rabin, 1999) have noted that the evidence is consistent with a declining rate of time preference, and have suggested various specification of discounting which give rise to declining discount rates over time, hyperbolic discounting, and quasi-hyperbolic discounting. Such specifications of discounting would introduce a fundamental paradigm change in economic theory: preferences with hyperbolic (or quasi-hyperbolic) discounting in fact, as opposed to preferences with exponential discounting, lack time-consistency. While experimental psychologists have collected an impressive amount of data on time preference in support of declining discount rates, in fact, most of this data is not without problems: often experiments have been conducted with hypothetical rewards, or with "points" redeemable at the end of the experiments (thereby eliminating any rationale for time preference); often the design of the experiments gives rise to issues of strategic manipulability, or of framing effects. Rarely have the data been analyzed with proper econometric instruments; in particular, the hypothesis of hyperbolic discounting has never been tested statistically against the alternative of exponential discounting. This is the objective of the present paper.
Suggested Citation
Jess Benhabib & Alberto Bisin, 2004.
"Is Discounting Hyperbolic? Experimental Evidence,"
2004 Meeting Papers
563, Society for Economic Dynamics.
Handle:
RePEc:red:sed004:563
Download full text from publisher
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below whether another version of this item is available online.
2. Check on the provider's
web page
whether it is in fact available.
3. Perform a
for a similarly titled item that would be
available.
More about this item
Keywords
;
;
JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
Statistics
Access and download statistics
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed004:563. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.