Hyperbolic discount curves: a reply to Ainslie
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Ainslie (Theory and Decision, 73, 3–34, 2012) challenges our interpretation of the properties of hyperbolic discount curves in an iterated prisoners’ dilemma (IPD) 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.
KeywordsHyperbolic Discount function Iterated prisoners’ dilemma
JEL ClassificationC72 C73 D90
I am especially grateful to Jochen Jungeilges for his comments, suggestions, and guidance in relation to the article that this paper references. I also thank Ellen K. Nyhus for numerous discussions on the subject, and George Ainslie for helpful comments. Financial support from the Competence Development Fund of Southern Norway is gratefully acknowledged.
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