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Is Time-Discounting Hyperbolic or Subadditive?

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Abstract

Subadditive time discounting means that discounting over a delay is greater when the delay is divided into subintervals than when it is left undivided. This may produce the most important result usually attributed to hyperbolic discounting: declining impatience, or the inverse relationship between the discount rate and the magnitude of the delay. Three choice experiments were conducted to test for subadditive discounting, and to determine whether it is sufficient to explain declining impatience. All three experiments showed strong evidence of subadditive discounting, but there was no evidence of declining impatience. I conclude by questioning whether hyperbolic discounting is a plausible account of time preference.

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  1. Department of Operational Research, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, United Kingdom

    Daniel Read

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Read, D. Is Time-Discounting Hyperbolic or Subadditive?. Journal of Risk and Uncertainty 23, 5–32 (2001). https://doi.org/10.1023/A:1011198414683

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