[Download] "Do Psychological Cues Alter Our Discount Function?(Report)" by North American Journal of Psychology # Book PDF Kindle ePub Free
eBook details
- Title: Do Psychological Cues Alter Our Discount Function?(Report)
- Author : North American Journal of Psychology
- Release Date : January 01, 2010
- Genre: Education,Books,Professional & Technical,
- Pages : * pages
- Size : 197 KB
Description
In finance, researchers use exponential discounting functions to model the difference in the values of a fixed sum of money received today and the same sum received in the future. Because it is mathematically simple and (at least with regard to financial calculations) logically defensible, economic psychologists have adopted exponential discounting in describing differences in utilities gained via current and future consumption. Exponential discounting, however, assumes a constant discount rate and so is inadequate for modeling cue-based behaviors--behaviors rooted in instinctual drives, including hunger, thirst, sexual desire, pain, and fear. Researchers have found that the need for immediate gratification is more intense in the presence of cue-based stimuli, and that the desire to satisfy the need intensifies with time (Laibson, 2001; Loewenstein, 1996). These findings are inconsistent with the assumption of a constant discount rate. In the presence of cue-based stimuli, a model that erroneously assumes a constant discount rate under-predicts the degree of subjective discounting at shorter time horizons and over-predicts the degree of subjective discounting at longer time horizons. Research has suggested that alternative models that allow for a varying discount rate (for example, hyperbolic discounting) would more accurately predict time-based preferences (Angeletos et al., 2001; Caballero and Pride, 1984; Laibson, 1997, 2001; Loewenstein, 2000; Wilson and Daly, 2003). The purpose of this study is to test the hypothesis that subjective discount rates vary with time horizons when subjects make decisions in the presence of cue-based stimuli, but do not vary with time horizons when subjects make decisions in the absence of cue-based stimuli.