Economics and Finance


Time Discounting: Psychophysics of Intertemporal and Probabilistic Choices

Authors: Taiki Takahashi, Ruokang Han, Fumihiko Nakamura

Intertemporal and probabilistic choices have been attracting attention in behavioral neuroeconomics. Although recent advances in neuroeconomics demonstrated neural processes underlying intertemporal and probabilistic choices, the roles of psychophysical effects on the choices have largely been understudied. In this paper, we review the roles of psychophysical effects in time and risk attitudes. It is shown that Loewenstein-Prelec’s generalized hyperbolic temporal discount function (Loewenstein and Prelec, 1992) and Prelec’s probability weighting function (Prelec, 1998) are naturally derived from psychophysical laws of time-perception.

Comments: 11 Pages.

Download: PDF

Submission history

[v1] 2013-02-05 23:39:25

Unique-IP document downloads: 243 times is a pre-print repository rather than a journal. Articles hosted may not yet have been verified by peer-review and should be treated as preliminary. In particular, anything that appears to include financial or legal advice or proposed medical treatments should be treated with due caution. will not be responsible for any consequences of actions that result from any form of use of any documents on this website.

Add your own feedback and questions here:
You are equally welcome to be positive or negative about any paper but please be polite. If you are being critical you must mention at least one specific error, otherwise your comment will be deleted as unhelpful.

comments powered by Disqus