Document Type

Article

Language

eng

Publication Date

4-2013

Publisher

Springer

Source Publication

Journal of Risk and Uncertainty

Source ISSN

0895-5646

Abstract

The observation of declining discount rates in experimental settings has led many to promote hyperbolic discounting over standard exponential discounting as the preferred descriptive model of intertemporal choice. I develop a new framework, consistent with the random utility model, which directly models the intertemporal utility function and produces explicit maximum likelihood estimates of discounting parameters. I apply this estimation method to a stated-preference survey of river basin cleanup options and revealed-preference lottery payment choices. Formal statistical tests fail to find evidence in support of hyperbolic or quasi-hyperbolic discounting. Annual discount rates range from ten to fourteen percent across the data sets and empirical specifications.

Comments

Accepted version. Journal of Risk and Uncertainty, Vol. 46, No. 2 (April 2013): 133-173. The final publication is available at Springer via DOI. © 2013 Springer. Used with permission.

Andrew Meyer was affiliated with Ohio Wesleyan University at the time of publication.

Shareable Link. Provided by the Springer Nature SharedIt content-sharing initiative.

Included in

Economics Commons

Share

COinS