Golden Eggs and Hyperbolic Discounting.¶
Laibson, D. (1997). Golden Eggs and Hyperbolic Discounting. Quarterly Journal of Economics, 112(2), 443-477.
Cited by¶
6 citations across 6 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Commitment Device
- Laibson (1997) showed that under hyperbolic discounting this is not irrational at all but the optimal response of a sophisticated agent who correctly predicts his own future impatience and prices illiquidity as a feature.
This sourceShows hyperbolic discounting induces dynamically inconsistent preferences, creating a motive for a sophisticated consumer to constrain future choices via an illiquid (commitment) asset; supports the claim that pricing illiquidity as a feature is the optimal response of a sophisticated present-biased agent.
- Laibson (1997) showed that under hyperbolic discounting this is not irrational at all but the optimal response of a sophisticated agent who correctly predicts his own future impatience and prices illiquidity as a feature.
- Discounting (Present Value)
- Laibson 1997
This sourceIntroduces the quasi-hyperbolic (beta-delta) discount function; shows hyperbolic discounting induces dynamically inconsistent preferences and a demand for commitment devices; supports the quasi-hyperbolic/time-inconsistency claim.
- Laibson 1997
- Greedy Algorithm
- In behavioural economics and psychology it is hyperbolic discounting, the marshmallow test, addiction dynamics, and present bias — a decision rule that takes the locally best immediate payoff and forfeits larger delayed ones.
This sourceModels present-biased (hyperbolic) discounting, the behavioral form of greedy choice on immediate payoff that forfeits larger delayed rewards, motivating commitment devices.
- In behavioural economics and psychology it is hyperbolic discounting, the marshmallow test, addiction dynamics, and present bias — a decision rule that takes the locally best immediate payoff and forfeits larger delayed ones.
- Temporal Inconsistency and Preference Reversals
- The agent's preference ordering over outcomes A, B, C appears stable when all are distant; this ordering fragments and inverts as the decision moment approaches, revealing that the agent's true valuation is not stationary but distance-dependent, as Laibson (1997) formalized in his quasi-hyperbolic (beta-delta) discounting model.
This sourceIntroduces the quasi-hyperbolic (beta-delta) discount function as a tractable model of distance-dependent valuation; shows how preferences expressed at temporal distance reverse at temporal proximity.
- The agent's preference ordering over outcomes A, B, C appears stable when all are distant; this ordering fragments and inverts as the decision moment approaches, revealing that the agent's true valuation is not stationary but distance-dependent, as Laibson (1997) formalized in his quasi-hyperbolic (beta-delta) discounting model.
- Time Preference (Discounting Future)
- David Laibson
This sourceIntroduces the quasi-hyperbolic (beta-delta) discount function as a tractable model of distance-dependent valuation; shows how preferences expressed at temporal distance reverse at temporal proximity.
- David Laibson
- Time Value of Money
- This two-pillar structure has motivated centuries of refinement: from Böhm-Bawerk's qualitative account of the three grounds for discounting, through Fisher's separation of impatience from investment opportunities, through Samuelson's formal DU apparatus, to modern behavioral refinements (Laibson 1997)
This sourceIntroduces the quasi-hyperbolic (beta-delta) discount function as a tractable model of distance-dependent valuation; shows how preferences expressed at temporal distance reverse at temporal proximity.
- This two-pillar structure has motivated centuries of refinement: from Böhm-Bawerk's qualitative account of the three grounds for discounting, through Fisher's separation of impatience from investment opportunities, through Samuelson's formal DU apparatus, to modern behavioral refinements (Laibson 1997)
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