Mazhara G., Postgraduate Student, National Technical University of Ukraine «Kyiv Polytechnic Institute. Igor Sikorsky», Kyiv, Ukraine

e-mail: SkyDoor13@gmail.com

Kapustyan V., Doctor of Physical and Mathematical Sciences, Professor, Head of Department of Mathematical modeling of Economic Systems, National Technical University of Ukraine Kyiv Polytechnic Institute Igor Sikorsky, Kyiv, Ukraine

ORCID ID: 0000-0002-5035-809X
e-mail: kapustyanv@ukr.net

Hyperbolic Discounting on the Behavior of Economic Agents with Different Cognitive Functions

Introduction the Discounted-Utility (DU) framework is widely used to model intertemporal choice, in economics and other fields (including behavioral ecology in biology). The DU model assumes that decision makers make current choices which maximize the discounted sum of instantaneous utilities in future periods. The most common assumption is that decision makers discount the future utility at time t by an exponentially declining discount factor, d(t)=δ^t.

Purpose of this study is to understand the behavior of economic agents in the material goods market, as well as to elucidate the impact of the principle of hyperbolized discounting in gaming tasks.

Result Hyperbolic discounting is most commonly used for products that are either associated with immediate deferred costs (gym visits, health checks), or immediate deferred benefits (smoking, credit card use, eating) and temptation. Several examples of economic agents’ behavior, their motivators for decision making, and the benefits they receive are considered. A contractual situation between a firm and economic agent is presented in terms of a hyperbolized discounter.

Conclusion given a fixed pool of resources (such as money or time), people may want to choose a sequence of events to maximize their overall enjoyment. Unfortunately, hyperbolic discounting makes this difficult. People cannot take advantage of the options they like, which become especially pleasant only in rare cases. For example, over time, you can ask people to choose alternatives so that the average pleasure is equal for each alternative (this is called land reclamation). People can pay too much attention to how much pleasure the good brings with the current consumption rate. They must take into account the potential pleasure that can be obtained in case of expectation of consumption of the good.

Keywords: behavioral economics; game theory; cognitive functions; dynamic tasks of several periods.

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