Notes on discounting.

Full Abstract

In general, if a variable can be expressed as a function of its own maximum value, that function may be called a discount function. Delay discounting and probability discounting are commonly studied in psychology, but memory, matching, and economic utility also may be viewed as discounting processes. When they are so viewed, the discount function obtained is hyperbolic in form. In some cases the effective discounting variable is proportional to the physical variable on which it is based. For example, in delay discounting, the physical variable, delay (D), may enter into the hyperbolic equation as kD. In many cases, however, the discounting data are not well described with a single-parameter discount function. A much better fit is obtained when the effective variable is a power function of the physical variable (kDS in the case of delay discounting). This power-function form fits the data of delay, probability, and memory discounting as well as other two-parameter discount functions and is consistent with both the generalized matching law and maximization of a constant-elasticity-of-substitution utility

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Author information

Author/s: Rachlin, Howard (H);

Affiliation: Psychology Department, Stony Brook Univer Stony Brook, NY 11794-2500, USA. howard.rachlin(-atsign-)sunysb.edu

Journal and publication information

Publication Type: Journal Article; Research Support, N.I.H., Extramural

Journal: Journal of the experimental analysis of behavior (J Exp Anal Behav), published in United States. (Language: eng)

Reference: 2006-May; vol 85 (issue 3) : pp 425-35

Dates: Created 2006/06/16; Completed 2006/10/31; Revised 2008/11/20;

PMID: 16776060, status: MEDLINE (last retrieval date: 12/26/2008)

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