Abstract
When agents have present bias, they discount more between now and the next period than between period t (> 1) and t + 1. How fast the future’s discount rate evaluated today decays is an empirical question. We show that the discount function can be non-parametrically identified using contracts that specify payments that take place at various points in time in the future and which are traded and priced in a market. We then use ground lease data from Amsterdam which have this characteristic to test for present bias in a flexible way. We find that a general-hyperbolic specification performs best, but that it is only slightly prefered above the much simples exponential specification.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
