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A measure of inconsistencies in intertemporal choice

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  • Salvador Cruz Rambaud
  • Isabel González Fernández

Abstract

The aim of this paper is to derive an index able to indicate if a discount function exhibits increasing or decreasing impatience, and, even, in the last case, whether the decreasing impatience is moderate or strong. Moreover, it will be shown that the sign of this indicator coincides with the sign of the convexity index of the discount function when only considering the cases of increasing and decreasing impatience. Consequently, this parameter supposes an improvement of Prelec’s index of convexity. The main advantage of this novel measure is that, the same as Prelec’s index, it uses the differential calculus and, moreover, can be easily plotted by showing the changes from a type of impatience to another one according to time.

Suggested Citation

  • Salvador Cruz Rambaud & Isabel González Fernández, 2019. "A measure of inconsistencies in intertemporal choice," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-24, October.
    • Handle: RePEc:plo:pone00:0224242
    DOI: 10.1371/journal.pone.0224242
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    References listed on IDEAS

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    5. Salvador Cruz Rambaud & Isabel González Fernández & Viviana Ventre, 2018. "Correction to: Modeling the inconsistency in intertemporal choice: the generalized Weibull discount function and its extension," Annals of Finance, Springer, vol. 14(3), pages 427-427, August.
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