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Disability Risk and Hyperbolic Discounting [PDF]

Economics Bulletin, 2015
This paper presents a model where the ability to enjoy consumption gets impaired by disabilities over time. A continuous-time Markov chain model is constructed to examine how disability risk affects consumers' discounting of future utilities. It is shown that hyperbolic discounting arises for all future periods when disabilities occur independently ...
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R. Sargisson, Benedikt V. Schöner
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Subadditive versus hyperbolic discounting: A comparison of choice and matching

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