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Full-Text Articles in Social and Behavioral Sciences
The Impacts Of Elicitation Mechanism And Reward Size On Estimated Rates Of Time Preference, Andrew G. Meyer
The Impacts Of Elicitation Mechanism And Reward Size On Estimated Rates Of Time Preference, Andrew G. Meyer
Economics Faculty Research and Publications
We run experiments with real monetary rewards ranging from $10 to $500 to estimate rates of time preference and test for hyperbolic discounting. Individuals become more patient with increasing reward sizes, which is consistent with a magnitude effect. This magnitude effect is robust across specifications including a nonparametric analysis and structural maximum likelihood estimation. Subjects are divided between two different elicitation mechanisms (one a matching task and one a choice task) that should both theoretically provide an incentive for participants to reveal their true time preferences. We find some evidence of differences between the rates from the matching and choice …
Estimating Discount Factors For Public And Private Goods And Testing Competing Discounting Hypotheses, Andrew G. Meyer
Estimating Discount Factors For Public And Private Goods And Testing Competing Discounting Hypotheses, Andrew G. Meyer
Economics Faculty Research and Publications
The observation of declining discount rates in experimental settings has led many to promote hyperbolic discounting over standard exponential discounting as the preferred descriptive model of intertemporal choice. I develop a new framework, consistent with the random utility model, which directly models the intertemporal utility function and produces explicit maximum likelihood estimates of discounting parameters. I apply this estimation method to a stated-preference survey of river basin cleanup options and revealed-preference lottery payment choices. Formal statistical tests fail to find evidence in support of hyperbolic or quasi-hyperbolic discounting. Annual discount rates range from ten to fourteen percent across the data …
Intertemporal Valuation Of River Restoration, Andrew G. Meyer
Intertemporal Valuation Of River Restoration, Andrew G. Meyer
Economics Faculty Research and Publications
Willingness to pay for an environmental improvement is a function of how long it takes to deliver the improvement. To measure the effect of time on benefits, I utilize a discrete choice experiment that includes an attribute for delay until the improvement occurs and simultaneously estimate discount rates and valuation parameters. I estimate the present value of immediate and delayed Minnesota River Basin improvements using discount rates directly estimated from the econometric model. Compared to an immediate river basin cleanup, Minnesota residents lose almost half of the benefits when cleanup is delayed by 5 years.