Delay Functions as the Foundation of Time Preference: Testing for Separable Discounted Utility / Keith Marzilli Ericson, Jawwad Noor.

Format:

Book

Author/Creator:

Ericson, Keith Marzilli.

Contributor:

National Bureau of Economic Research.

Noor, Jawwad.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21095.

NBER working paper series no. w21095

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Delay Functions as the Foundation of Time Preference

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Delay functions, which vary timing of rewards but fix the money dimension, can elicit the form of discount functions with minimal assumptions. We present a general theorem that characterizes the set of discount functions and utility indices compatible with any 'regular' preference. We provide conditions to test for separable discounted utility (SDU). We elicit individual delay functions for a range of amounts and time horizons. When we impose SDU assumptions, we classify more than half our analysis sample as exponential discounters. However, we reject SDU assumptions for 68% of the sample in favor of magnitude-dependent discounting with time distortion.

Notes:

Print version record

April 2015.