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Is the evidence for hyperbolic discounting in humans just an experimental artefact?

Published online by Cambridge University Press:  25 October 2005

Glenn W. Harrison  and
Morten Igel Lau
Glenn W. Harrison*
Affiliation:
Department of Economics, College of Business Administration, University of Central Florida, Orlando, Florida32816-1400http://www.bus.ucf.edu/gharrison
Morten Igel Lau*
Affiliation:
Centre for Economic and Business Research, Copenhagen Business School, DK-2000Frederiksberg, Denmarkhttp://www.cebr.dk/mol
*
Glenn.Harrison@bus.ucf.edu
mol@cebr.dk
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Abstract

We question the behavioral premise underlying Ainslie's claims about hyperbolic discounting theory. The alleged evidence for humans can be easily explained as an artefact of experimental procedures that do not control for the credibility of payment over different time horizons. In appropriately controlled and financially motivated settings, human behavior is consistent with conventional exponential preferences.

Type
Open Peer Commentary
Information
Behavioral and Brain Sciences , Volume 28 , Issue 5 , October 2005 , pp. 657
Copyright
Copyright © Cambridge University Press 2005

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References

Notes

1. Holcomb and Nelson (1992) reexamined the role of a FED with monetary payoffs, motivated by a concern that Benzion et al. (1989) only studied hypothetical choices. Their FED was only one day long, so it is not obvious that the subjects viewed this as substantially different from there being no FED. They observed no apparent effect of the one-day FED on behavior.

2. Such settings might include individual decisions of whether to consume now or save for future consumption, or to purchase a more expensive but energy efficient appliance. We believe that individual decisions involving more significant sums of money or public policy decisions are better characterized as having a FED.