Weighted discounting: on group diversity, time-inconsistency, and consequences for investment
This paper presents the class of weighted discount functions, which contains the discount functions commonly used in economics and finance. Weighted discount functions may describe the discounting behavior of groups, uncertainty about what discount rate to use, present-biased time preferences, and a...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Article (Journal) |
| Language: | English |
| Published: |
2020
|
| In: |
Journal of economic theory
Year: 2020, Volume: 189, Pages: 1-40 |
| DOI: | 10.1016/j.jet.2020.105089 |
| Online Access: | Verlag, lizenzpflichtig, Volltext: https://doi.org/10.1016/j.jet.2020.105089 Verlag, lizenzpflichtig, Volltext: https://www.sciencedirect.com/science/article/pii/S0022053118305295 
|
| Author Notes: | Sebastian Ebert, Wei Wei, Xun Yu Zhou |
| Summary: | This paper presents the class of weighted discount functions, which contains the discount functions commonly used in economics and finance. Weighted discount functions may describe the discounting behavior of groups, uncertainty about what discount rate to use, present-biased time preferences, and all of these simultaneously. As an application, we study investment behavior under weighted discounting and come up with the following general result: Greater group diversity, greater parameter uncertainty, and more present-biased time preferences lead to delayed investment or, equivalently, more risk-taking. |
|---|---|
| Item Description: | Gesehen am 20.03.2023 |
| Physical Description: | Online Resource |
| DOI: | 10.1016/j.jet.2020.105089 |