Please use this identifier to cite or link to this item:
Gerber, Anke
Rohde, Kirsten I.M.
Year of Publication: 
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Consumer Behaviour and Intertemporal Choice G17-V3
Many empirical studies on intertemporal choice report preference reversals in the sense that a preference between a small reward to be received soon and a larger reward to be received later reverses as both rewards are equally delayed. Such preference reversals are commonly interpreted as contradicting constant discounting. This interpretation is correct only if baseline consumption to which the outcomes are added, remains constant over time. The difficulty with measuring discounting when baseline consumption changes over time, is that delaying an outcome has two effects: (1) due to the change in baseline consumption, it changes the extra utility from receiving the outcome, and (2) it changes the factor by which this extra utility is discounted. In this paper we propose a way to disentangle the two effects, which allows us to draw conclusions about discounting even when baseline consumption changes over time.
Hyperbolic discounting
Constant discounting
Preference reversals
Decreasing impatience
Document Type: 
Conference Paper

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.