Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/87416 
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 11-087/3
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
When agents have present bias, they discount more between now and thenext period than between period t (> 1) and t + 1. How fast the future discount rate (evaluated today) decays is an empirical question. Weshow that the discount function can be non-parametrically identified withcontracts that specify payments that take place at various points in timein the future and which are traded and priced in a competitive market.We use a unique land lease-contract data set for Amsterdam, which hasthe above properties, to test for present bias in a flexible way. We findno evidence for present bias in this market. Even though we allow for ageneral-hyperbolic specification (which has exponential discounting as aspecial case), our estimates converge to an exponential discount functionwith a corresponding discount rate (in our baseline specification) of 8 %.
Subjects: 
present bias
hyperbolic discounting
discount rate
hedonic estimation
JEL: 
C52
D03
D12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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