Description
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.| Period | 2008 |
|---|---|
| Event title | XIII International Conference on the Foundations Applications of Utility, Risk and Decision Theory |
| Event type | Unknown |
| Degree of Recognition | International |