title: Concave utility, transaction costs, and risk in measuring discounting of delayed rewards.
abstract: Research has consistently found that the decline in the present values of delayed rewards as delay increases is better fit by hyperbolic than by exponential delay-discounting functions. However, concave utility, transaction costs, and risk each could produce hyperbolic-looking data, even when the underlying discounting function is exponential. In Experiments 1 (N = 45) and 2 (N = 103), participants placed bids indicating their present values of real future monetary rewards in computer-based 2nd-price auctions. Both experiments suggest that utility is not sufficiently concave to account for the superior fit of hyperbolic functions. Experiment 2 provided no evidence that the effects of transaction costs and risk are large enough to account for the superior fit of hyperbolic functions.
authors.affiliation: Department of Psychology, Williams College, Williamstown, Massachusetts 01267, USA. kkirby@williams.edu
authors.forename: Kris N
authors.initials: KN
authors.lastname: Kirby
authors.forename: Mariana
authors.initials: M
authors.lastname: Santiesteban
mesh_terms: D000293:Adolescent; D000328:Adult; D002755:Choice Behavior; D005260:Female; D006801:Humans; D008297:Male; D008960:Models, Psychological; D011897:Random Allocation; D012201:Reward; D012306:Risk; D013997:Time Factors