{"id":12451,"date":"2019-11-20T10:23:32","date_gmt":"2019-11-20T08:23:32","guid":{"rendered":"https:\/\/modecon.mnau.edu.ua\/?p=12451"},"modified":"2019-12-17T12:27:33","modified_gmt":"2019-12-17T10:27:33","slug":"hyperbolic-discounting-on-the-behavior","status":"publish","type":"post","link":"https:\/\/modecon.mnau.edu.ua\/en\/hyperbolic-discounting-on-the-behavior\/","title":{"rendered":"Mazhara G., Kapustyan V. Hyperbolic Discounting on the Behavior of Economic Agents with Different Cognitive Functions"},"content":{"rendered":"

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JEL Classification<\/strong>: D91.<\/span><\/td>\nDOI<\/b>: https:\/\/doi.org\/10.31521\/modecon.V17(2019)-21<\/a><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_column_text][vc_column_text]<\/p>\n

Mazhara G.<\/strong>, Postgraduate Student, National Technical University of Ukraine \u00abKyiv Polytechnic Institute. Igor Sikorsky\u00bb, Kyiv, Ukraine<\/p>\n

e-mail<\/strong>:\u00a0SkyDoor13@gmail.com<\/a><\/p>\n

Kapustyan V.<\/strong>, 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<\/p>\n

ORCID ID<\/strong>:\u00a00000-0002-5035-809X<\/a>
\ne-mail<\/strong>:\u00a0kapustyanv@ukr.net<\/a><\/p>\n

Hyperbolic Discounting on the Behavior of Economic Agents with Different Cognitive Functions<\/h2>\n

 <\/p>\n

Introduction<\/strong> 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)=\u03b4t<\/sup>.<\/p>\n

Purpose<\/strong> 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.<\/p>\n

Result<\/strong> 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.<\/p>\n

Conclusion<\/strong> 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.<\/p>\n

Keywords<\/strong>: behavioral economics; game theory; cognitive functions; dynamic tasks of several periods.<\/p>\n

References:<\/strong><\/p>\n

    \n
  1. Samuelson, P. (1937). A Note on the Measurement of Utility. Review of Economic Studies,<\/em> 4, 155-161.<\/li>\n
  2. Thaler, R. (1980). Toward a Positive Theory of Consumer Choice. Journal of Economic Behavior and Organization<\/em>, 1, 39-60.<\/li>\n
  3. Thaler, R. (1981). Some Empirical Evidence on Dynamic Inconsistency. Economic Letters<\/em>, 8, 201-207.<\/li>\n
  4. Ainslie, G. (1975). Specious Reward: A Behavioral Theory of Impulsiveness and Impulse Control. Psychological Bulletin<\/em>, 82 (4), 463-496.<\/li>\n
  5. Holcomb, J. and P. Nelson (1992). Another Experimental Look at Individual Time Preference. Rationality and Society<\/em>, 4 (2), 199-220.<\/li>\n
  6. Pender J. (1996). Discount Rates and Credit Markets: Theory and Evidence from Rural India. Journal of Development Economics<\/em>, 50 (2), 257-296.<\/li>\n
  7. McClure, S., Laibson, D., Loewenstein, G. and J. Cohen (2004). Separate Neural Systems Value Immediate and Delayed Monetary Rewards. Science<\/em>, 306, 503-507.<\/li>\n
  8. O\u2019Donoghue, T. and Rabin, M. (1999a). Doing It Now or Later. American Economic Review<\/em>, 89 (1), 103-124.<\/li>\n
  9. Phelps, E. and Pollak, R. (1968). On Second-Best National Saving and Game-Equilibrium Growth. Review of Economic Studies<\/em>, 35 (2), 185-199.<\/li>\n
  10. Laibson, D. (1997). Golden Eggs and Hyperbolic Discounting. Quarterly Journal of Economics<\/em>, 112 (2), 443-477.<\/li>\n
  11. O\u2019Donoghue, T. and Rabin, M. (1999b). Incentives for Procrastinators. Quarterly Journal of Economics<\/em>, 114, 769-816.<\/li>\n
  12. O\u2019Donoghue, T. and Rabin, M. (1999c). Addiction and Self- Control, in Elster, J. (ed.), Addiction: Entries and Exits, Russell Sage Foundation.<\/li>\n
  13. O\u2019Donoghue, T. and Rabin, M. (2001). Choice and Procrastination. Quarterly Journal of Economics,<\/em> 116, 121-160.<\/li>\n
  14. O\u2019Donoghue, T. and Rabin, M. (2003). Self Awareness and Self Control, in Baumeister, R., Loewenstein, G. and D. Read, (eds.), Time and Decision: Economic and Psychological Perspectives on Intertemporal Choice, Russell Sage Foundation.<\/li>\n
  15. Ariely, D. and Wertenbroch, K. (2002). Procrastination, Deadlines, and Performance: Self-control by Precommitment. Psychological Science<\/em>, 13 (3), 219-224.<\/li>\n<\/ol>\n

    [\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Received:<\/strong> 03 September 2019<\/p>\n

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    Mazhara G., Kapustyan V., (2019). Hyperbolic Discounting on the Behavior of Economic Agents with Different Cognitive Functions. Modern Economics, 17(2019)<\/em>, 133-138. DOI: https:\/\/doi.org\/10.31521\/modecon.V17(2019)-21.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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    [vc_row][vc_column][vc_column_text] JEL Classification: D91. DOI: https:\/\/doi.org\/10.31521\/modecon.V17(2019)-21 [\/vc_column_text][vc_column_text] Mazhara G., Postgraduate Student, National Technical University of Ukraine \u00abKyiv Polytechnic Institute. Igor Sikorsky\u00bb, Kyiv, Ukraine e-mail:\u00a0SkyDoor13@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
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