The models of internal self-control that have recently been proposed by behavioral economists do not depict motivational interaction that occurs while temptation is present. Those models that include willpower at all either envision a faculty with a motivation (“strength”) different from the motives that are weighed in the marketplace of choice, or rely on incompatible goals among diverse brain centers. Both assumptions are questionable, but these models’ biggest problem is that they do not let resolutions withstand re-examination while being challenged (...) by impulsive alternatives. The economists’ models all attempt to make a single equilibrium preference predictable from a person’s prior incentives. This was the original purpose of these models’ hyperboloid (“β–δ”) delay discount functions, which have been widely justified by the assumption that a person’s intertemporal inconsistency (impulsiveness) can be accounted for by the arousal of appetite for visceral rewards. Although arousal is clearly a factor in some cases of intertemporal inconsistency, it cannot be blamed for others, and furthermore does not necessarily imply hyperboloid discounting. The inadequacy of β–δ functions is particularly evident in models of internal self-control. I have reviewed several of these models, and have argued for a return to pure hyperbolic discount function as originally proposed, the relatively high tails of which can motivate a recursive process of self-prediction and thereby the formation of self-enforcing intertemporal contracts. Such a process does not require a separately motivated faculty of will, or incompatible goals among brain centers; but it also does not permit the prediction of unique preferences from prior incentives. (shrink)

In this paper, we present a time-varying and non-stationary but non-hyperbolic discount function that explains dynamic preference reversal. The new discount function emerges from an analysis of intertemporal consumption and savings choices with mortality risk and an altruistic factor. Our analysis shows that the process of updating survival information may also account for dynamic preference reversal.

I argue that George Ainslie’s model of Hyperbolic Discounting fails to yield strict akratic action. But it does yield a deflated view. Furthermore, by understanding the nature of a hyperbolically discounting self, we can also offer a deflated view of self-deception, according to which self-deception is motivated error by hyperbolic discounters who desire to view themselves as rational.

The Perception-Action Model (PAM) is a cogent theory of how organisms get information about others' experiences. However, such a stimulus-driven mechanism does not handle well the complex choices that humans face about how to respond to this information. Hyperbolic reward discounting permits a reward-driven mechanism for both how aversive empathic experiences can compete for attention and how pleasurable empathic experiences are constrained.

Ainslie challenges our interpretation of the properties of hyperbolic discount curves in an iterated prisoners’ dilemma model. In this reply, we discuss the emergence of hyperbolic discount functions in the behavioral economics literature and evaluate their properties. Furthermore, we present a summarized version of our IPD model and evaluate Ainslie’s points of contention.

We conduct an experiment to investigate the degree to which deviations from exponential discounting can be accounted for by the hypothesis of hyperbolic discounting. Subjects are asked to choose between an earlier or later payoff in a series of 40 choice questions. Each question consists of a pair of monetary amounts determined by compounding a given base amount at a constant rate per period. Two bases (8 and 20 dollars), three compounding rates (low, medium and high) and (...) three delays (2, 4, and 6 weeks) are each used. There are also 2 initial periods (Today and 2 weeks) and there are two separate questionnaires, one with lower “realistic” compounding rates and the other with higher compounding rates, typical of those used in previous studies. We analyze the detailed patterns of choice in 6 groups of 6 related questions each (in which the base and rate is fixed but the initial period and delay varies), documenting the frequency of patterns consistent with exponential discounting and with hyperbolic discounting. We find that exponential discounting is the clear modal choice pattern in virtually all cases. Hyperbolic discounting is never the modal pattern (except in the sense that constant discounting is a special case of hyperbolic discounting). We also estimate a linear probability model that takes account of individual heterogeneity. The estimates show substantial increases in the probability of choosing the later option when the compounding rate increases, as one would expect. There are small, sometimes significant, increases in this probability when the delay is increased or the initial period is in the future. Such behavior is consistent with hyperbolic discounting, but can account for only a small proportion of choices. Overall, deviations from exponential discounting appear to be due to error, or to other effects not accounted for by hyperbolic discounting. Principal among these is an increase in later choices when the base is larger. (shrink)

What is addiction? Why do some people become addicted while others do not? Is the addict rational? In this book, Craig Hanson attempts to answer these questions and more. Using insights from the beginnings of philosophy to contemporary behavioral economics, Hanson attempts to assess the variety of ways in which we can and cannot, understand addiction. Special consideration is given to a challenging (and controversial) proposal dubbed “hyperbolic discounting.” Hanson proposes some modifications to the hyperbolic discounting (...) view that permit it to explain not only addiction, but also a variety of psychological maladies, such as self-deception. (shrink)

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.

Ainslie insightfully refines the concept of willpower by emphasizing low-effort applications of resolve. However, he gives undue weight to intertemporal discounting as the problem that willpower is needed to overcome. Nonhumans typically don't encounter choices that differ only in the time of consumption. Humans learn to transform uncertainty into problems they can solve using culturally evolved mechanisms for quantifying risk.

This paper studies the interaction between savagean uncertainty and time preferences. We introduce a variation of the discounted subjective expected utility model, where time preferences are state dependent. Before uncertainty is resolved, the individual is unsure about the discount factor that will be used, even when evaluating certain payoffs. The model can account for the present bias and diminishing impatience, even if the future is discounted geometrically. The present bias disappears when the immediate payoff becomes uncertain. Although preferences are not (...) stationary, choices may be time consistent. (shrink)

Under the presupposition that human time perception is distorted in intertemporal choice, this study constructs a time scale in the framework of axiomatic measurement. First, the conditions (homogeneity of degree one or two) to identify the form of a time scale are proposed so that one can determine whether the hyperbolic or exponential is a more suitable function for modeling people’s discounting. Homogeneity of degree one implies that subjective time delay is measured by a power scale and its (...) discount function becomes a power-exponential type, whereas homogeneity of degree two implies that subjective time delay is measured by a log scale and its discount function becomes a hyperbolic type. Second, a method is shown for constructing a model that can reflect subadditive and superadditive discounting. A non-commutative and non-associative concatenation operation is provided to generate a time string consisting of subdivided durations that incorporates the effect of repeated delay with a subdivided duration. The discounting model is yielded by substituting these strings in an exponential model equipped with a generalized time scale, and the determination of subadditivity or superadditivity depends on whether the discount function value of a product by the non-commutative and non-associative operation is, respectively, smaller or greater than that of a product by an operation of the usual extensive structure. (shrink)

In typical critical thinking texts, hyperbole is presented as being largely “argumentationally innocent” - it’s primary role being to express emotion of to bring desired emphases to a particular point. This discounts its prevalent use in argumentation, as it is also used as a device to persuade, and in particular, to persuade an interlocutor that they should take or support a course of action. When it is so used, the exaggerated claims would, if true, provide greater support for the conclusion. (...) But since the claims are not fully accurate, this “greater support” is only illusory. Its use is thus deceptive and counts as fallacious reasoning. (shrink)

Time discounting is the phenomenon that a desired result in the future is perceived as less valuable than the same result now. Economic theories can take this psychological fact into account in several ways. In the economic literature the most widely used type of additive time discounting is exponential discounting. In exponential discounting, the fall of valuation depends by a constant factor on the length of the delay period. It is well known, however, that exponential time (...) discounting often does not describe well how people actually behave. Most people are averse to short delays in gratification now, while their future selves may not mind a bit of extra waiting. This behaviour can be described well by non-exponential discounting functions such as hyperbolic discounting. In hyperbolic discounting, valuations fall rapidly for small delay periods, but the fall gets slower for longer delay periods. Hyperbolic discounting captures phenomena such as procrastination, addiction and in general inconsistency over time. This chapter investigates whether forms of non-exponential discounting, in particular close to the so called Quasi-Hyperbolic model, could also be characterized in terms of dynamically consistent choices when individuals discount the welfare of future selves as well as their payoffs. (shrink)

This paper challenges the conventional wisdom dominating the social sciences and philosophy regarding temporal discounting, the practice of discounting the value of future utility when making decisions. Although there are sharp disagreements about temporal discounting, a kind of standard model has arisen, one that begins with a normative standard about how we should make intertemporal comparisons of utility. This standard demands that in so far as one is rational one discounts utilities at future times with an exponential (...) discount function. Tracing the justification for this standard through economics, philosophy and psychology, I’ll make what I believe is the best case one can for it, showing how a non-arbitrariness assumption and a dominance argument together imply that discounting ought to be exponential. Ultimately, however, I don’t find the case compelling. Non-exponential temporal discounting is often rational. If this is correct, Instead of trying to ‘fix’ non-exponential discounting because it is irrational and associated with negative life outcomes, we might instead focus attention on why the conditions obtain that make such discounting rational. (shrink)

I find much to like in Craig Callender's [2022] arguments for the rational permissibility of non-exponential time discounting when these arguments are viewed in a conditional form: viz., if one thinks that time discounting is rationally permissible, as the social scientist does, then one should think that non-exponential time discounting is too. However, time neutralists believe that time discounting is rationally impermissible, and thus they take zero time discounting to be the normative standard. The time (...) neutralist rejects time discounting because they think it is rationally impermissible to prefer to live a worse life in expectation because of arbitrariness. Callender’s attack on the time-neutralist position is the following: the time-neutralist’s non-arbitrariness intuition assumes the existence of nonexistent ‘pure’ time preferences. In response, I aim to clarify the time-neutralist position and show that the non-arbitrariness argument does not rely on the existence of pure time preferences. Instead, the debate between time neutralism and permissivism about time discounting boils down to a methodological question: can we ever criticize the content of preferences? If so, we should embrace time neutralism. (shrink)

Temporal discounting is the tendency to devalue temporally distant rewards. Past studies have examined the k-value, the indifference point, and the area under the curve as dependent measures on this task. The current study included these three measures and a fourth measure, called the interest rate total score. The interest rate total score was based on scoring only those items in which the delayed choice should be preferred given the expected return based on simple interest rates. In addition, associations (...) with several individual difference measures were examined including intelligence, executive functions (inhibition, working memory, and set-shifting), thinking dispositions (Need for Cognition and Consideration of Future Consequences) and engagement in substance use and gambling behavior. A staircase temporal discounting task was examined in a sample of 99 university students. Replicating previous studies, temporal discounting increased with longer delays to reward and decreased with higher reward magnitudes. A hyperbolic function accounted for variance in temporal discounting better than an exponential function. Reaction time at the indifference point was significantly longer than at the other choice points. The four dependent measures of temporal discounting were all significantly correlated and were also significantly associated with our individual difference measures. That is, the tendency to wait for a larger delayed reward on all of the temporal discounting measures was associated with higher intelligence, higher executive functions and more consideration of future consequences. Associations between our measures of temporal discounting and outcomes related to substance use and gambling behavior were modest in our university sample. (shrink)

One’s generosity to others declines as a function of social distance, which is known as social discounting. We examined cultural similarities and differences in social discounting and the mediating roles of the two aspects of interdependence (self-expression and distinctiveness of the self) as well as the two aspects of independence (harmony-seeking and rejection avoidance). Using the same procedure that previous researchers used to test North Americans, Study 1 showed that compared to North Americans, Japanese discount more steeply a (...) partner’s outcomes compared to their own future outcomes, whereas the decrease in the subjective value of the partner’s outcomes accelerates less as a function of social distance. To examine the cultural similarities and differences in social discounting in more detail, Study 2 tested Japanese and Germans and found that the hyperbolic with exponent model fitted the participants’ discounting behaviors better than the other models, except for the loss condition in Germans where the utility of the q-exponential model was indicated. Moreover, although the social discounting rate was higher in Japanese than in Germans, the cultural difference was limited to the gain frame. However, the decline in a person’s generosity accelerated less as a function of social distance in Japanese than in Germans. Furthermore, the cultural difference in the social discounting in gains was mediated by the level of harmony-seeking, which was higher in Germans than in Japanese. Implications for individuals’ generosity against the backdrop of cultural characteristics are discussed. (shrink)

Models of intertemporal choice draw on three evaluation rules, which we compare in the restricted domain of choices between smaller sooner and larger later monetary outcomes. The hyperbolic discounting model proposes an alternative-based rule, in which options are evaluated separately. The interval discounting model proposes a hybrid rule, in which the outcomes are evaluated separately, but the delays to those outcomes are evaluated in comparison with one another. The tradeoff model proposes an attribute-based rule, in which both (...) outcomes and delays are evaluated in comparison with one another: People consider both the intervals between the outcomes and the compensations received or paid over those intervals. We compare highly general parametric functional forms of these models by means of a Bayesian analysis, a method of analysis not previously used in intertemporal choice. We find that the hyperbolic discounting model is outperformed by the interval discounting model, which, in turn, is outperformed by the tradeoff model. Our cognitive modeling is among the first to offer quantitative evidence against the conventional view that people make intertemporal choices by discounting the value of future outcomes, and in favor of the view that they directly compare options along the time and outcome attributes. (shrink)

Behavioral science has long been puzzled by the experience of temptation, the resulting impulsiveness, and the variably successful control of this impulsiveness. In conventional theories, a governing faculty like the ego evaluates future choices consistently over time, discounting their value for delay exponentially, that is, by a constant rate; impulses arise when this ego is confronted by a conditioned appetite. Breakdown of Will presents evidence that contradicts this model. Both people and nonhuman animals spontaneously discount the value of expected (...) events in a curve where value is divided approximately by expected delay, a hyperbolic form that is more bowed than the rational, exponential curve. With hyperbolic discounting, options that pay off quickly will be temporarily preferred to richer but slower-paying alternatives, a phenomenon that, over periods from minutes to days, can account for impulsive behaviors, and over periods of fractional seconds can account for involuntary behaviors. Contradictory reward-getting processes can in effect bargain with each other, and stable preferences can be established by the perception of recurrent choices as test cases in recurrent intertemporal prisoner's dilemmas. The resulting motivational pattern resembles traditional descriptions of the will, as well as of compulsive phenomena that can now be seen as side-effects of will: over-concern with precedent, intractable but circumscribed failures of self-control, a motivated unconscious, and an inability to exploit emotional rewards. Hyperbolic curves also suggest a means of reducing classical conditioning to motivated choice, the last necessary step for modeling many involuntary processes like emotion and appetite as reward-seeking behaviors; such modeling, in turn, provides a rationale for empathic reward and the “construction” of reality. Key Words: altruism ; appetite; behavioral economics; classical conditioning; compulsions; dynamic inconsistency; emotions; empathy; freedom of will; hyperbolic discounting; impulsiveness; intertemporal bargaining; self-control; social construction; volition; weakness of will. (shrink)

Earlier study has shown that procrastination can be explained by quasi-hyperbolic discounting. We present a model of effort choice over time that shifts the focus from completion of to performance on a single task. We find that being aware of the own self-control problems may reduce a person’s performance as well as his or her overall well-being, which is in contrast to the existing literature on procrastination. Extending this framework to a multi-task model, we show that interim deadlines (...) help a quasi-hyperbolic discounter to structure his or her workload more efficiently, which in turn leads to better performance. Moreover, being restricted by deadlines increases a quasi-hyperbolic discounter’s well-being. Thus, we provide a theoretical underpinning for recent empirical evidence and numerous casual observations. (shrink)

This paper discusses the validity of nudges to tackle time-inconsistent behaviours. I show that libertarian paternalism is grounded on a peculiar model of personal identity, and that the argument according to which nudges may improve one’s self-assessed well-being can be seriously questioned. I show that time inconsistencies do not necessarily reveal that the decision maker is irrational: they can also be the result of discounting over the degree of psychological connectedness between our successive selves rather than over time. Time (...) inconsistency can call for paternalism if and only if we accept that an individual is characterised by stable “true” preferences over time-dependent outcomes, and that she is rationally required to make time-consistent choices. This model is descriptively and normatively questionable. I then argue that behavioural findings may still justify paternalistic interventions, but on a non-welfarist basis. (shrink)

Rachlin's hyperbolic-discounting model captures basic features of the subtlety of human impulsiveness and self-control and has received convincing experimental support. His distinction between self-control patterns and impulsive acts expands his earlier work to a greater range of self-control behaviors. Possible mechanisms that may weaken or strengthen patterns of self-control are considered.

Ainslie uses his hyperbolic discount model to explain a dazzling array of puzzling motivational phenomena. In so doing, he assumes that the motivational force of a given option at a given time is directly proportional to its discount-adjusted reward as assessed at that time. He overlooks three other factors which, independently of the perceived reward, can affect motivational force.

The objective of this article is to test a prediction of the quasi-hyperbolic model. The test is innovative in that it uses an experimental implementation in which there are two treatments: a forward market and a spot market. In each of these markets goods and activities are sold. The good and activities sold are investment goods or activities and temptation goods or activities. The prediction of the quasi-hyperbolic model is that in the spot (forward) market participants will buy (...) more temptation (investment) goods and activities than in the forward market and less investment (temptation) good and activities. This prediction is not confirmed by the data, and hence is at odds with previous experiments which have shown support for the hyperbolic model. We speculate on the reasons for this. (shrink)

Some scholars see interdisciplinarity as a special case of a broader unificationist program. They accept the unification of the sciences as a regulative ideal, and derive from this the normative justification of interdisciplinary research practices. The crucial link for this position is the notion of integration: integration increases the cohesion of concepts and practices, and more specifically of explanations, ontologies, methods and data. Interdisciplinary success then consists in the integration of fields or disciplines, and this constitutes success in the sense (...) that unification is epistemically desirable. In contrast to this account, I defend the thesis that successful interdisciplinary interaction does not necessarily imply the integration of these disciplines. I show this at the hand of two cases. In both the case of evolutionary game theory and the case of hyperbolic discounting, genuine interdisciplinary exchange took place. From both exchanges, the respective economic fields emerged substantially altered – it wasn’t just a juxtaposition of disciplines in which disciplinary identities remained unchanged. Yet in neither case did the disciplines integrate. Rather, they developed their own concepts and methods, their own explanations, own ontologies, and their own views of what proper data standards were. Furthermore, the fields that emerged from these exchanges were very successful, if measured at the hand of properties like explanatory success, increase of control, bibliometrics and grant yields. Thus, I argue, there are cases of interdisciplinary success without integration. (shrink)

We analyze the dynamics of repeated interaction of two players in the Prisoner's Dilemma under various levels of interdependency information and propose an instance-based learning cognitive model to explain how cooperation emerges over time. Six hypotheses are tested regarding how a player accounts for an opponent's outcomes: the selfish hypothesis suggests ignoring information about the opponent and utilizing only the player's own outcomes; the extreme fairness hypothesis weighs the player's own and the opponent's outcomes equally; the moderate fairness hypothesis weighs (...) the opponent's outcomes less than the player's own outcomes to various extents; the linear increasing hypothesis increasingly weighs the opponent's outcomes at a constant rate with repeated interactions; the hyperbolic discounting hypothesis increasingly and nonlinearly weighs the opponent's outcomes over time; and the dynamic expectations hypothesis dynamically adjusts the weight a player gives to the opponent's outcomes, according to the gap between the expected and the actual outcomes in each interaction. When players lack explicit feedback about their opponent's choices and outcomes, results are consistent with the selfish hypothesis; however, when this information is made explicit, the best predictions result from the dynamic expectations hypothesis. (shrink)

Lewis ascribes the stubborn persistence of addictions to habit, itself a normal process that does not imply lack of responsiveness to motivation. However, he suggests that more dynamic processes may be involved, for instance that “our recurrently focused brains inevitably self-organize.” Given hyperbolic delay discounting, a reward-seeking internal marketplace model describes two processes, also normal in themselves, that may give rise to the “deep attachment” to addictive activities that he describes: People learn to interpret current choices as test (...) cases for how they can expect to choose in the future, thus recruiting additional incentive against a universal tendency to temporarily prefer smaller, sooner to larger, later rewards. However, when this incentive is not enough, the same interpretation creates incentive to abandon the failed area, leading to the abstinence violation effect and a localized weak will. Normal human value does not come entirely, or even mainly, from expectation of external rewards, but is generated endogenously in imagination. Hyperbolic discounting provides an account of how we learn to cultivate the hedonic importance of occasions for endogenous reward by building appetite. In this account, expectations of the far future have to be rewarded endogenously if they are be as important as currently rewarded alternatives; and this importance is prone to collapse. Both will and hedonic importance are recursive and thus hard to study by controlled experiment, but do represent modelable, reward-based hypotheses about the dynamic nature of habit. (shrink)

Craig Callender attempts to overturn conventional wisdom within decision theory by contending that rational intertemporal choices need not always conform to an exponential discounting function. He argues that there are cases in which hyperbolic discounting is the height of rationality. This paper does not seek to undermine Callender’s conclusions, but instead raises two interrelated theoretical concerns with his way securing them. The first concern is with his dismissal of influential dual-system explanations of rationality. It is argued that (...) Callender’s criticisms of said explanations fail to assess them at anything like their full weight. It is then suggested that dual-systems approaches in cognitive science do have substantial theoretical problems, but that Callender fails to identify them. The second concern builds on the first and suggests that Callender’s arguments against consensus normative standards might motivate a more dramatically reimagined notion of rationality than the one he seems to embrace. (shrink)

‘Intentionalist’ approaches portray self-deceivers as “akratic believers”, subjects who deliberately choose to believe p despite knowing that p is false. In this paper I argue that the intentionalist model leads to a number of paradoxes that seem to undermine it. I claim that these paradoxes can nevertheless be overcome in light of the rival hypothesis that self-deception is a non-intentional process that stems from the influence of emotions upon cognitive processes. Furthermore, I propose a motivational interpretation of the phenomenon of (...) ‘hyperbolic discounting bias’ which highlights the role of emotional biases in akratic behavior. Finally, I argue that we are not the helpless victims of our irrational attitudes, insofar as we have the ability – and arguably the epistemic obligation – to counteract motivational biases. (shrink)

The essays in this volume offer a thorough discussion of the relationship between addiction and rationality. This book-length treatment of the subject includes contributions from philosophers, psychiatrists, neurobiologists, sociologists and economists. Contrary to the widespread view that addicts are subject to overpowering and compulsive urges, the authors in this volume demonstrate that addicts are capable of making choices and responding to incentives. At the same time they disagree with Gary Becker's argument that addiction is the result of rational choice. The (...) volume offers an exposition of the neurophysiology of addiction, a critical examination of the Becker theory of rational addiction, an argument for a 'visceral theory of addiction', a discussion of compulsive gambling as a form of addiction, several discussions of George Ainslie's theory of hyperbolic discounting, analyses of social causes and policy implications, and an investigation of the problem of relapse. (shrink)

Canonical utility theory may have adopted its selfishness postulate because it lacked theoretical rationales for two major kinds of incentive: empathic utility and self-signaling. Empathy – using vicarious experiences to occasion your emotions – gives these experiences market value as a means of avoiding the staleness of self-generated emotion. Self-signaling is inevitable in anyone trying to overcome a perceived character flaw. Hyperbolic discounting of future reward supplies incentive mechanisms for both empathic utility and self-signaling. Neither can be effectively (...) suppressed for an experimental game. (shrink)

The problem of intertemporal choice arises when outcomes are received in different moments of time. This paper presents an axiomatic model of intertemporal choice when consumption in the previous moment of time contributes to utility evaluation of consumption in the current moment. This model generalizes classic discounted utility theory (also known as constant or exponential discounting) in two ways. First, in every moment of time, a decision maker derives utility not only from current consumption but also from “residual” consumption (...) in the previous moment of time. Second, these utilities are discounted with weights that are essentially a quasi-hyperbolic discounting function. The paper presents an application of the proposed model to the problem of optimal consumption and savings given a fixed income (wealth). When a decision maker derives satisfaction from both instantaneous consumption as well as a share of consumption in the previous moment of time, optimal consumption path is cyclic—periods of relatively high consumption are interchanged with periods of relatively low consumption. These cycles decay over time. Asymptotically, the consumption path exhibits conventional properties (constant, increasing or decreasing over time when a gross interest rate multiplied by discount factor is correspondingly equal to, greater than, or less than one). (shrink)

I propose to complement Ainslie's idea of “bargaining with your future selves” with that of “shaping your past selves.” The result of such a complementation is that an action can work in two ways: (1) as a predecent for future behavior and (2) as a shaper of past behavior. I argue that this diminishes the unwanted effects of hyperbolic discounting even further.

Dispassionate cruelty and the euphoria of hunting or battle should be distinguished from the emotional savoring of victims' suffering. Such savoring, best called negative empathy, is what puzzles motivational theory. Hyperbolic discounting theory suggests that sympathy with people who have unwanted but seductive traits creates a threat to self-control. Cruelty to those people may often be the least effortful way of countering this threat.

Previous research showed that accumulations of capital following stationary interest rates are underestimated by human judges. Hyperbolic discounting was suggested as a descriptive and explanatory model for this phenomenon. First, we investigated judged accumulated capital after a period of annual growth and decline. The degree of underestimation increased with accumulated growth and the results supported hyperbolic discounting as a descriptive model on the group level. However, the hyperbolic model did not apply to the data for (...) one third of the participants. Second, we investigated how investment decisions were related to capital accumulation before the investments and to judgments of the possible outcomes of the future investments. To our surprise, the participants’ judgments of expected future accumulated capital did not add predictive power to predictions based on whether there was growth or decline before the investment decision. Unfortunately this strategy leads to suboptimal investment decisions. (shrink)

Ainslie’s Picoeconomics presents an ingenious theory, based on a remarkably simple basic law about the rate of discounting the value of future prospects, which explains a vast number of psychological phenomena. Hyperbolic discount rates result in changes in the ranking of interests as they get closer in time. Thus quasi-homuncular “interests” situated at different times compete within the person. In this paper I first defend the generality of scope of Ainslie’s model, which ranges over several personal and subpersonal (...) levels of psychological analysis. I raise a problem which results from the temporal relativity of assessments of value, and affects the possibility of objective values. Finally, I offer one example of a form of time-related irrationality on which Ainslie’s scheme does not seem to have a grip, namely one which relates not to a situation’s relative position in time, but to its temporal (‘progressive’ or ‘perfect’) temporal aspect. (shrink)

The will has generated a wider range of opinions than most phenomena, lacking as it does both an animal model and consistent behavioral correlates. It has even been held not to exist. The commentators approached my intertemporal bargaining (picoeconomic) model from many angles. Doubts about the existence of the underlying phenomenon, hyperbolic discounting, were still raised by some, but other commentators added to the evidence for it, which I regard now as overwhelming. Where mechanisms of self-control were specified, (...) I found it possible to place them within a picoeconomic framework. (shrink)

Intertemporal bargaining theory based on the hyperbolic discounting of expected rewards accounts for how choosing in categories increases self-control, without postulating, as Rachlin does, the additional rewardingness of patterns per se. However, altruism does not seem to be based on self-control, but on the primary rewardingness of vicarious experience. We describe a mechanism that integrates vicarious experience with other goods of limited availability.

“Self-deception” usually occurs when a false belief would be more rewarding than an objective belief in the short run, but less rewarding in the long run. Given hyperbolic discounting of delayed events, people will be motivated in their long-range interest to create self-enforcing rules for testing reality, and in their long-range interest to evade these rules. Self-deception, then, resembles interpersonal deception in being an evasion of rules, but differs in being a product of intertemporal conflict.

The author of this fascinating book explores the problem of decision-making. As a basis, he uses hyperbolic discounting theory to discuss many basic assumptions related to self-control. In an accessible conversational tone, he succeeds in capturing many current problems in decision science and presents a rational framework for further work.

One of the reasons for adopting hyperbolic discounting is to explain preference reversals. Another is that this value structure suggests an elegant theory of the will. I examine the capacity of the theory to solve Newcomb's problem. In addition, I compare Ainslie's account with other procedural theories of choice that seem at least equally capable of accommodating reversals of preference.

Ainslie’s Picoeconomics presents an ingenious theory, based on a remarkably simple basic law about the rate of discounting the value of future prospects, which explains a vast number of psychological phenomena. Hyperbolic discount rates result in changes in the ranking of interests as they get closer in time. Thus quasi-homuncular “interests” situated at different times compete within the person. In this paper I first defend the generality of scope of Ainslie’s model, which ranges over several personal and subpersonal (...) levels of psychological analysis. I raise a problem which results from the temporal relativity of assessments of value, and affects the possibility of objective values. Finally, I offer one example of a form of time-related irrationality on which Ainslie’s scheme does not seem to have a grip, namely one which relates not to a situation’s relative position in time, but to its temporal (‘progressive’ or ‘perfect’) temporal aspect. (shrink)

Ainslie’s Picoeconomics presents an ingenious theory, based on a remarkably simple basic law about the rate of discounting the value of future prospects, which explains a vast number of psychological phenomena. Hyperbolic discount rates result in changes in the ranking of interests as they get closer in time. Thus quasi-homuncular “interests” situated at different times compete within the person. In this paper I first defend the generality of scope of Ainslie’s model, which ranges over several personal and subpersonal (...) levels of psychological analysis. I raise a problem which results from the temporal relativity of assessments of value, and affects the possibility of objective values. Finally, I offer one example of a form of time-related irrationality on which Ainslie’s scheme does not seem to have a grip, namely one which relates not to a situation’s relative position in time, but to its temporal (‘progressive’ or ‘perfect’) temporal aspect. (shrink)

Ainslie’s Picoeconomics presents an ingenious theory, based on a remarkably simple basic law about the rate of discounting the value of future prospects, which explains a vast number of psychological phenomena. Hyperbolic discount rates result in changes in the ranking of interests as they get closer in time. Thus quasi-homuncular “interests” situated at different times compete within the person. In this paper I first defend the generality of scope of Ainslie’s model, which ranges over several personal and subpersonal (...) levels of psychological analysis. I raise a problem which results from the temporal relativity of assessments of value, and affects the possibility of objective values. Finally, I offer one example of a form of time-related irrationality on which Ainslie’s scheme does not seem to have a grip, namely one which relates not to a situation’s relative position in time, but to its temporal (‘progressive’ or ‘perfect’) temporal aspect. (shrink)

We propose a theoretical model to explain the usage of time-inconsistent behavior as a strategy to exploit others when reputation and trust have secondary effects on the economic outcome. We consider two agents with time-consistent preferences exploiting common resources. Supposing that an agent is believed to have time-inconsistent preferences with probability p, we analyze whether she uses this misinformation when she has the opportunity to use it. Using the model originally provided by Levhari and Mirman (Bell J Econ 11(1):322–334, 1980), (...) we determine the optimal degree of present bias that the agent would like to have while pretending to have time-inconsistent preferences and we provide the range of present-bias parameter under which deceiving is optimal. Moreover, by allowing the constant relative risk aversion class of utility form, we characterize the distinction between pretending to be naive and sophisticated. (shrink)

We present a theory of decision by sampling (DbS) in which, in contrast with traditional models, there are no underlying psychoeconomic scales. Instead, we assume that an attribute’s subjective value is constructed from a series of binary, ordinal comparisons to a sample of attribute values drawn from memory and is its rank within the sample. We assume that the sample reflects both the immediate distribution of attribute values from the current decision’s context and also the background, real-world distribution of attribute (...) values. DbS accounts for concave utility functions; losses looming larger than gains; hyperbolic temporal discounting; and the overestimation of small probabilities and the underestimation of large probabilities. Ó 2005 Elsevier Inc. All rights reserved. (shrink)