Published online by Cambridge University Press: 25 October 2005
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.
1. Holcomb and Nelson (1992) reexamined the role of a FED with monetary payoffs, motivated by a concern that Benzion et al. (1989) only studied hypothetical choices. Their FED was only one day long, so it is not obvious that the subjects viewed this as substantially different from there being no FED. They observed no apparent effect of the one-day FED on behavior.
2. Such settings might include individual decisions of whether to consume now or save for future consumption, or to purchase a more expensive but energy efficient appliance. We believe that individual decisions involving more significant sums of money or public policy decisions are better characterized as having a FED.
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