Discount models in intertemporal choice: an empirical analysis
Entity
UAM. Departamento de Financiación e Investigación ComercialPublisher
EmeraldDate
2021-02-12Citation
10.1108/EJMBE-01-2019-0003
European Journal Of Management And Business Economics 30.1 (2021): 72-91
ISSN
2444-8451 (print); 2444-8494 (online)DOI
10.1108/EJMBE-01-2019-0003Funded by
This paper has been partially supported by the project “La sostenibilidad del sistema nacional de salud: reformas, estrategias y propuestas,” reference: DER2016- 76053-R, Ministry of Economy and CompetitivenessProject
Gobierno de España. DER2016- 76053-REditor's Version
https://doi.org/10.1108/EJMBE-01-2019-0003Subjects
Discount function; Discounted utility model; Empirical analysis; Intertemporal choice; Preferences; EconomíaRights
© Isabel María Parra Oller, Salvador Cruz Rambaud and María del Carmen Valls Martínez.Abstract
Purpose: The main purpose of this paper is to determine the discount function which better fits the individuals' preferences through the empirical analysis of the different functions used in the field of intertemporal choice. Design/methodology/approach: After an in-depth revision of the existing literature and unlike most studies which only focus on exponential and hyperbolic discounting, this manuscript compares the adjustment of data to six different discount functions. To do this, the analysis is based on the usual statistical methods, and the non-linear least squares regression, through the algorithm of Gauss-Newton, in order to estimate the models' parameters; finally, the AICc method is used to compare the significance of the six proposed models. Findings: This paper shows that the so-called q-exponential function deformed by the amount is the model which better explains the individuals' preferences on both delayed gains and losses. To the extent of the authors' knowledge, this is the first time that a function different from the general hyperbola fits better to the individuals' preferences. Originality/value: This paper contributes to the search of an alternative model able to explain the individual behavior in a more realistic way
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Google Scholar:Parra Oller, Isabel María
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Cruz Rambaud, Salvador
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Valls Martínez, María del Carmen
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