Delay Effect and Subadditivity. Proposal of a New Discount Function: The Asymmetric Exponential Discounting

The framework of this paper is intertemporal choice and, more specifically, the so-called delay effect. Traditionally, this anomaly, also known as decreasing impatience, has been revealed when individuals reverse their preferences over monetary or non-monetary rewards. In this manuscript, we will an...

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Bibliographic Details
Published in:Mathematics (Basel) 2020-03, Vol.8 (3), p.367
Main Authors: Cruz Rambaud, Salvador, Ortiz Fernández, Piedad
Format: Article
Language:English
Subjects:
decreasing impatience
delay effect
discount function
inconsistency
intertemporal choice
subadditivity
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Summary:The framework of this paper is intertemporal choice and, more specifically, the so-called delay effect. Traditionally, this anomaly, also known as decreasing impatience, has been revealed when individuals reverse their preferences over monetary or non-monetary rewards. In this manuscript, we will analyze the delay effect by using preference relations and discount functions. The treatment of the delay effect with discount functions exhibits several scenarios for this paradox. Thus, the objective of this paper is to deduce the different expressions of the delay effect and their mathematical characterizations by using discount functions in stationary and dynamic settings. In this context, subadditivity will be derived as a particular case of decreasing impatience. Finally, we will introduce a new discount function, the so-called asymmetric exponential discount function, able to describe decreasing impatience.
ISSN:2227-7390
2227-7390
DOI:10.3390/math8030367