S-shaped probability weighting and hyperbolic discounting

  • Herbert Walther (Redner*in)

Aktivität: VortragWissenschaftlicher Vortrag (Science-to-Science)

Beschreibung

Intertemporal decision making has to take into account the unavoidable uncertainty surrounding the realization of gains and losses in the future. An intertemporal state-dependent expected utility model, deducing probability weighting by incorporating anticipated emotional reactions towards resolution of uncertainty, is sufficient to explain hyperbolic discounting. A .sign-effect. (losses are discounted less than gains), Loewenstein.s delay-speed up asymmetry and a magnitude effect for losses (larger outcomes are discounted less) appear under fairly general conditions. A ‘perverse’ magnitude effect develops, however, for gains (larger outcomes are discounted more). Within the domain of small gains a magnitude effect can be rationalized by incorporating anticipated transaction costs. As a corollary, a subject will discount gains at higher and losses at lower rates, if it is poor.
Zeitraum2008
EreignistitelXIII International Conference on the Foundations Applications of Utility, Risk and Decision Theory
VeranstaltungstypKeine Angaben
BekanntheitsgradInternational