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Axiomatization and measurement of quasi-hyperbolic discounting. (English) Zbl 1400.91148

Summary: This article provides an axiomatic characterization of quasi-hyperbolic discounting and a more general class of semi-hyperbolic preferences. We impose consistency restrictions directly on the intertemporal trade-offs by relying on what we call “annuity compensations.” Our axiomatization leads naturally to an experimental design that disentangles discounting from the elasticity of intertemporal substitution. In a pilot experiment we use the partial identification approach to estimate bounds for the distributions of discount factors in the subject pool. Consistent with previous studies, we find evidence for both present and future bias.

MSC:

91B08 Individual preferences
91A90 Experimental studies
62P20 Applications of statistics to economics
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