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Noisy coding of time and reward discounting

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  • Ferdinand M. Vieider

Abstract

I present a model generating delay-discounting from noisy mental representations of time delays. The optimal combination of noisy signals about time delays with prior information results in a stochastic model predicting discounting to exhibit present-bias, but to be stationary and delaydependent once up-front delays are introduced. The derivation from an optimal encoding-decoding process sidesteps arbitrariness concerns voiced about earlier models. Data collected in an experiment support the need for separate but interacting parameters to capture present-bias and delaydependence. The account explains why non-trivial discounting is routinely observed in experiments using monetary rewards instead of consumption.

Suggested Citation

  • Ferdinand M. Vieider, 2021. "Noisy coding of time and reward discounting," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 21/1036, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:21/1036
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    File URL: http://wps-feb.ugent.be/Papers/wp_21_1036.pdf
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    Cited by:

    1. Stephen L. Cheung & Kieran MacGibbon & Arquette Milin-Byrne & Agnieszka Tymula, 2024. "Quasi-exponential discounting," Working Papers 2024-16, University of Sydney, School of Economics.
    2. Benjamin Enke & Thomas Graeber & Ryan Oprea & Thomas W. Graeber, 2023. "Complexity and Hyperbolic Discounting," CESifo Working Paper Series 10861, CESifo.
    3. Benjamin Enke & Thomas Graeber & Ryan Oprea, 2023. "Complexity and Time," CESifo Working Paper Series 10327, CESifo.

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