How Good Is the Exponential Function Discounting Formula?
How good is the Exponential Function Discounting Formula? An Experimental Study.
We studies in financial economics and behavioral finance always attempt to explain various anomalies documented in the empirical literature. Recently, Loewenstein and O'Donoghue extensive review study of time discounting, they conclude the discount utility model have little empirical support. One of the anomalies, they note, is the declining-discount-rates result established in the economic psychology literature, and often referred to as hyperbolic time discounting.
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