An anticipative hyperbolic discount utility on intertemporal decision making

Yeu-Shiang Huang, Chao Ze Hsu

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Discount utility is facilitated to scrutinize human decision behaviors for different points in time under the consideration of time preference. Recent studies are extended from two basic models, which are the exponential and the hyperbolic discount models, and the more popular hyperbolic discount model is well recognized for resolving the effects of preference reversal and is less steeply discounting than the exponential discount model. However, to enhance the capability of explaining intertemporal decision making behavior, an anticipative hyperbolic discount utility model was proposed which revised the conventional hyperbolic discount utility by introducing the anticipative parameters under the consideration of anticipation of future gains or losses. An empirical investigation was employed to validate the effectiveness of the proposed anticipative hyperbolic discounting utility model, which was able to empirically go beyond the traditional hyperbolic discounting utility model. Also, the proposed anticipative hyperbolic model is capable of dealing with the anomalies of preference reverse and framing effects.

Original languageEnglish
Pages (from-to)281-290
Number of pages10
JournalEuropean Journal of Operational Research
Volume184
Issue number1
DOIs
Publication statusPublished - 2008 Jan 1

Fingerprint

Discount
Decision making
Decision Making
Discounting
Model
Anticipation
Reversal
Anomaly
Reverse

All Science Journal Classification (ASJC) codes

  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

Cite this

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An anticipative hyperbolic discount utility on intertemporal decision making. / Huang, Yeu-Shiang; Hsu, Chao Ze.

In: European Journal of Operational Research, Vol. 184, No. 1, 01.01.2008, p. 281-290.

Research output: Contribution to journalArticle

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