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The purpose of this paper is to examine the applicability of the alternative way of discounting, such as the hyperbolic discount method, for the economic feasibility test on Free Trade Zone development project that needs intergenerational analysis.

To analyze the effects of applying alternative discounting method in the cost-benefit analysis, this paper uses the hyperbolic discount method and HM-Treasury’s method (Britain), as well as the traditional exponential discount method. Also, this study uses benefit and cost data from the actual feasibility test of the Free Trade Zone development project in Korea, to obtain better policy implication.

For the case of long-term analysis, using the exponential discounting method in the benefit-cost analysis could not give us balanced analytic results, because it discounts too much on future generation’s benefits. In contrast, if we use the hyperbolic discounting method, we could obtain better balanced results since it can control the generational effects. This paper also finds that for the results to be valid, the analysis period must be expanded long enough (a minimum of 100 years).

The major findings of this paper confirm the results of previous studies regarding long-term benefit-cost analysis. Also, the result of this paper is properly compatible with the findings of behavioral economics, such as the time inconsistency of preferences. However, no research has been done with the proper length of analytic periods for using hyperbolic discounting yet. To examine this matter, this paper performs benefit-cost analysis with actual data from the feasibility studies in Korea. To the best of the author’s knowledge, this is the first study to find the proper length of analytic periods that can be compatible with the hyperbolic discount method.

The purpose of this paper is to portray the valuation of financial investments as mental time travel.

In a series of thought investments, $1 invested in an investment fund is mentally projected forward in time and then discounted back to the present – with no objective time passing. The thought investments feature symmetric valuation (in which discount rates exactly match projection rates) and asymmetric valuation (in which discount rates and projection rates happen to differ). They show how asymmetric valuation can result in differences between the current personal value and market value of an investment and, by way of real-world illustration, between a closed-end investment fund's net asset value and its market value. The authors explore possible reasons for asymmetric valuation.

Thought investments illustrating mental time travel can be used to help understand both financial investment valuation generally and, more specifically, established explanations of the closed-end investment fund puzzle. The authors show how different expectations, different perceptions of time and risk and different risk and time preferences might help determine value.

There are vast literatures on prospection, discounting and future-orientated or intertemporal decision-making. The authors’ innovation is to illustrate how these mental activities might combine to facilitate financial investment valuation. In particular, the authors show that a low personal discount rate could be a consequence of a shortened perception of future time and vice versa.

The purpose of this paper is to introduce the main measures of inconsistency in the context of intertemporal choice and to identify the relationships between them (more specifically, the measures by Prelec, Takahashi and Rohde). In effect, Thaler (1981), awarded the Nobel Prize in Economics 2017, argued that when a preference must be expressed between two reward options, some people may reverse their original preference when a significant delay is introduced before the reward is to be received. This anomaly is known as inconsistency in intertemporal choice.

After a revision of the existing literature and by using the methods from mathematical calculus, the authors have derived the logical relationships between the measures presented in this paper.

The main contribution of this paper is the proposal of a novel parameter, the so-defined ratio of two instantaneous discount rates, which the authors call the instantaneous variation rate, which allows relating some other measures of inconsistency, namely the measures described by Prelec and Rohde. A limitation of this paper is the unavailability of empirical information about the inconsistency measures needed to substantiate the theoretical findings. Indeed, this paper has social implications because recent behavioral and neuroeconomic studies have shown the existence of preference reversal or time inconsistency in other areas. The authors’ models can be implemented in these fields in order to better analyze the situations of inconsistency.

The originality of this paper lies in the authors’ aim to bring some order to the proposed measures of inconsistency which have arisen as a result of the different approaches adopted.

The relevance of present consumption bias on personal finance has been confirmed in several studies and has important theoretical and practical implications. It has important, measurable implications when analyzing commitment or self-control, adherence to healthy habits (e.g. exercising or dieting), procrastination tendencies or savings. The purpose of this paper is to contribute to our understanding of these issues by postulating a model of income uncertainty within a hyperbolic discounting framework that measures the cost of financial intertemporal inconsistencies related to this bias. The emphasis is on the analysis of this cost. We also propose experimental designs and consistent estimation methods, as well as agent-based modelling extensions.

The authors develop a finite-horizon model with hyperbolic preferences. Individuals have a present bias distinct from their discount rate so their choices face intertemporal inconsistencies. The authors further extend the analysis with uncertainty about future incomes. Specifically, individuals live for three periods, and the authors find the optimal consumption levels in the perfect-information benchmark by backward induction. They then proceed to add biases and uncertainty to characterize their implications and measure the costs of the intertemporal inconsistencies they cause.

The authors measure how an agent's utility is greater when they “tie their hands” than when they are free to re-evaluate and change their consumption schedule. This “cost of being vulnerable to falling into temptation” only depends (increasingly) on the measure of the present bias and (decreasingly) on the discount factor. They analyze the varying effects on utility and consumption of changes in impatience and optimism. They conclude by discussing theoretical and practical implications; they also propose agent-based simulations, as well as empirical and experimental designs, to further test the relevance and applications of the results.

This model has important, measurable implications when analyzing commitment or self-control, adherence to healthy habits (e.g. exercising or dieting), procrastination tendencies or savings.

The results enhance the estimation of the costs of present biases such that employers can better identify the incentives required to acquire and retain human capital. The authors provide evidence that workers are vulnerable to contract renegotiations and about the need for a regulator that restores ex-ante efficiency. Similarly, in the private sector, firms could recognize the postulated consumer profiles and focus their resources on anxious, too-optimistic or potentially addictive consumers; this, again, provides some justification about the need for a regulator.

In traditional exponential discounting, the marginal rate of substitution of consumption between two points depends only on their distance; thus, it allows none of the intertemporal inconsistencies we often observe in real life. Therefore, hyperbolic discounting better fits the data. The authors model choice under uncertainty and focus on the costs caused when present biases (ex-post) push behaviour away from ex-ante optimality. They conclude by proposing experimental designs to further enhance the estimation and implications of these costs. The postulated refinements have the potential to improve previous analyses on commitment devices and commitment-related regulation.

This chapter conducts a systematic comparison of behavioral economics’s challenges to the standard accounts of economic behaviors within three dimensions: under risk, over time, and regarding other people. A new perspective on two underlying methodological issues, i.e., inter-disciplinarity and the positive/normative distinction, is proposed by following the entanglement thesis of Hilary Putnam, Vivian Walsh, and Amartya Sen. This thesis holds that facts, values, and conventions have inter-dependent meanings in science which can be understood by scrutinizing formal and ordinary language uses. The goal is to provide a broad and self-contained picture of how behavioral economics is changing the mainstream of economics.

Managerial accounting education generally insists that managers should never consider sunk costs. This suggestion seems inconsistent with a common mode of thinking about future rewards: quasi-hyperbolic discounting. This paper aims to explore the conflict between sunk cost consideration and quasi-hyperbolic discounting and to illustrate when sunk cost consideration may be appropriate.

The author conducted three numerical experiments, i.e. simulated experiments based on analytical models, to demonstrate how it can be beneficial to consider sunk costs in some circumstances. All three numerical experiments assume quasi-hyperbolic discounting. First, the author tested considering sunk costs with future rewards that are certain. Second, the author tested considering sunk costs with uncertain future rewards. Finally, the author tested two different educational interventions to change decision-makers’ thought patterns.

The author found that considering sunk costs worsens decisions when there is bad news and improves them when there is good news. The author found that an educational intervention that partially dissuades managers from considering sunk costs improves decisions when bad news arrives and worsens them when good news arrives. The author also found that an educational intervention that reduces uncertainty improves decisions when bad news arrives and does not worsen these decisions when good news arrives.

The author provided numerical examples of situations in which considering sunk costs is valuable. The findings on educational interventions provide information about the tradeoffs of teaching that sunk costs should never be considered.

We investigate causes for the cost overrun and delay of the railway project Stuttgart 21. Besides, we try to forecast the actual costs and completion date at an early stage.

The results of exploratory research show the causes for the cost overrun and delay of Stuttgart 21; we compare our findings with other railway projects. To estimate the costs at an early stage, the reference class forecasting (RCF) model is applied; to estimate the time, we apply an OLS regression.

We find that the following causes are relevant for the cost overrun and delay of Stuttgart 21: scope changes, geological conditions, high risk-taking propensity, extended implementation, price overshoot, conflict of interests and lack of citizens' participation. The current estimated costs are within our 95% confidence interval based on RCF; our time forecast underestimates or substantially overestimates the duration actually required.

A limitation of our approach is the low number of comparable projects which are available.

The use of hyperbolic function or stepwise exponential discount function can help to give a clearer picture of the costs and benefits. The straightforward use of the RFC for costs and OLS for time should motivate more decision-makers to estimate the actual costs and time which are necessary in the light of the rising demand for democratic participation amongst citizens.

More realistic estimates can help to reduce the significant distortion at the beginning of infrastructure projects.

We are among the first who use the RCF to estimate the costs in Germany. Furthermore, the hyperbolic discounting function is added as a further theoretical explanation for cost underestimation.

This study aims to conduct a bibliometric analysis on “intertemporal choice” behavior of individuals from journals in the Scopus database between 1957 and 2023. The research covered the data on the said topic since it first originated in the Scopus database and carried out performance analysis and content analysis of papers in the business management and finance disciplines.

Bibliometric analysis, including science mapping and performance analysis, followed by content analysis of the papers of identified clusters, was conducted. Three clusters based on cocitation analysis and six themes (three major and three minor) were identified using the bibliometrix package in R studio. The content analysis of the papers in these clusters and themes have been discussed in this study, along with the thematic evolution of intertemporal choice research over the period of time, paving a way for future research studies.

The review unpacks publication and citation trends of intertemporal choice behavior, the most significant authors, journals and papers along with the major clusters and themes of research based on cocitation and degree of centrality and relevance, respectively, i.e. discounting experiments and intertemporal choice, impulsivity, risk preference, time-inconsistent preference, etc.

Over the past years, the research on “intertemporal choice” has flourished because of the increasing interest of researchers and scholars from different fields and the dynamic and pervasive nature of this topic. The well-developed and scattered body of knowledge on intertemporal choice has led to the need of applying a bibliometric analysis in the intertemporal choice literature.

The main purpose of this paper is to determine the discount function which better fits the individuals' preferences through the empirical analysis of the different functions used in the field of intertemporal choice.

After an in-depth revision of the existing literature and unlike most studies which only focus on exponential and hyperbolic discounting, this manuscript compares the adjustment of data to six different discount functions. To do this, the analysis is based on the usual statistical methods, and the non-linear least squares regression, through the algorithm of Gauss-Newton, in order to estimate the models' parameters; finally, the AICc method is used to compare the significance of the six proposed models.

This paper shows that the so-called q-exponential function deformed by the amount is the model which better explains the individuals' preferences on both delayed gains and losses. To the extent of the authors' knowledge, this is the first time that a function different from the general hyperbola fits better to the individuals' preferences.

This paper contributes to the search of an alternative model able to explain the individual behavior in a more realistic way.