Discounting Under Impact of Risk Aversion
9 Pages Posted: 6 Feb 2015
Date Written: February 5, 2015
The main aim of this study is to describe risk aversion impact on present value. The term risk aversion and the loss risk aversion are considered in this work. Three different models of discounting functions are obtained as a result of these studies. The formal influence of behavioural factors on the discount was pointed out. In this way it is show that that non-additive present value function may be economically justified. This study carries out assuming fulfilment of the diminishing marginal wealth utility law.
Keywords: Present value, Discounting, Discounted utility, Risk aversion, First Gossen’s Law
JEL Classification: C02, D92, G02, G12
Suggested Citation: Suggested Citation