Decreasing term structure of psychological discount rates: Experimental estimation and determinants
de La Bruslerie, Hubert (2015), Decreasing term structure of psychological discount rates: Experimental estimation and determinants, Journal of Behavioral and Experimental Finance, 6, p. 13–26. 10.1016/j.jbef.2015.02.006
TypeArticle accepté pour publication ou publié
Journal nameJournal of Behavioral and Experimental Finance
MetadataShow full item record
Author(s)de La Bruslerie, Hubert
Dauphine Recherches en Management [DRM]
Abstract (EN)Many empirical and behavioral studies identify a decreasing slope in the term structure of subjective discount rates. Using an experimental methodology based on “free-time” relative comparisons, this paper aims to identify in individual behaviors whether agents see their psychological value of time as decreasing or not. We elicit the negative shape of the subjective discount rates. They can be parameterized using two variables, one specifying the instantaneous time preference and the other characterizing the slope of the term structure. A trade-off law is identified between these two parameters. We show that the term structure of psychological rates depends strongly on gender, but appears not to be linked with life expectancy. We also question the cross-relationship between risk aversion and time preference. From a theoretical point of view, these two variables stand as two different and independent dimensions. However, empirically, the time preference attitude seems to be directly influenced by the risk attitude.
Subjects / KeywordsHyperbolic discounting; Time preference; Behavioral economics; Psychological time value; Risk aversion
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