"Economics and psychology"? The case of hyperbolic discounting

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Abstract

The article questions the methodology of "economics and psychology" in its focus on the case of hyperbolic discounting. Using some experimental results, I argue that the same type of evidence, which rejects the standard constant discount utility functions, can just as easily reject hyperbolic discounting as well. Furthermore, a decision-making procedure based on similarity relations better explains the observations and is more intuitive. The article concludes that combining "economics and psychology" requires opening the black box of decision makers instead of modifying functional forms.

Original languageEnglish
Pages (from-to)1207-1216
Number of pages10
JournalInternational Economic Review
Volume44
Issue number4
DOIs
StatePublished - Nov 2003

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