Discount Functions and Self-Control Problems

10 Pages Posted: 8 Oct 2013 Last revised: 28 Mar 2014

See all articles by Frank Caliendo

Frank Caliendo

Utah State University

T. Scott Findley

Utah State University

Multiple version iconThere are 2 versions of this paper

Date Written: December 10, 2013

Abstract

In this paper we propose a new strategy for comparing the behavior of a hyperbolic discounter who possesses self-control problems to an exponential discounter who does not. Our strategy controls for inherent differences in overall levels of impatience across discount functions, which thereby allows us to isolate the pure effect of self-control problems. We argue that self-control problems, in their pure form as we identify them, can have a very surprising effect on intertemporal choices. Our method reveals that differences in decision making that could be attributed to self-control problems are at least partly (and perhaps entirely) just an artifact of an uncontrolled comparison.

Keywords: Discounting, Intertemporal Choice, Saving, Self-Control Problems

JEL Classification: D91, C61, D03

Suggested Citation

Caliendo, Frank and Findley, T. Scott, Discount Functions and Self-Control Problems (December 10, 2013). Economics Letters, 122(3), 416-419 (2014), Available at SSRN: https://ssrn.com/abstract=2337093 or http://dx.doi.org/10.2139/ssrn.2337093

Frank Caliendo

Utah State University ( email )

Logan, UT 84322
United States

T. Scott Findley (Contact Author)

Utah State University ( email )

Department of Economics and Finance
3565 Old Main Hill
Logan, UT 84322-3565
United States
+001-435-797-2371 (Phone)

HOME PAGE: http://tscottfindley.com

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