Gamma Discounting¶
Weitzman, M. L. (2001). Gamma Discounting. American Economic Review, 91(1), 260-271.
Cited by¶
1 citation across 1 artifact.
Each citation links to the sentence it supports in the citing article.
Mechanisms¶
- Declining Discount-Rate Schedule
- Let the low rate dominate the tail. The decline follows from rate uncertainty: averaged over possible futures, distant flows are governed by the lowest plausible rate, which is why the curve bends toward it.
This sourceDerives a certainty-equivalent discount rate that declines with horizon under rate uncertainty as lower-rate scenarios increasingly dominate distant present values.
- Let the low rate dominate the tail. The decline follows from rate uncertainty: averaged over possible futures, distant flows are governed by the lowest plausible rate, which is why the curve bends toward it.
Verification¶
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