Time Preference: Experiments and Foundations
Jawwad Noor*
Date: 2010-05-23 9:30 am – 10:00 am
Last modified: 2010-05-17
Abstract
In order to elicit discount functions, experiments commonly analyze how subjects trade-off money and time. This paper posits that the data that purely expresses discounting is obtained by fixing the money dimension and varying only the time dimension. Based on this, a theorem is presented for regular preferences (monotone weak orders) over dated rewards that characterizes the general mapping from preferences to compatible discount functions and utility indices. The theorem suggests an experimental procedure that can be used for nonparametric testing of any intertemporal choice theory and for the elicitation of discount functions under weaker assumptions that those maintained in the literature.