1,721,086 research outputs found
Subadditive discount functions with a transition period
No full textIn this paper, the dosage of the times in the repeated and fractionable actions is studied. The interventions in time are abstract in nature and deal also with the psychological aspect of the individual behavior, in a wider perspective of utility, or the management of procedures in output systems. Furthermore, decomposability of discount functions is explored, and time period splitting plans are considered. Such procedures are analyzed, for instance, in the treatment of drug addiction, and various applications in behavioral sciences have been found. We wonder whether it would be convenient an infinite subdivision, that is, a finest fragmentation of time period (for a medical treatment, or a financial process, or a man-machine interrelation); or, on the contrary, a possible efficient subdivision must be bounded. Specifically, we deal with the problem of finding the expression of a discount function able to distinguish between favorableness and unfavorableness of the refinements of splitting levels for general processes
An analysis of intertemporal inconsistency through the hyperbolic factor
Full text linkAbstract
Intertemporal choices play a fundamental role in the lives of individuals, and the Discounted
Utility model is the essential framework for describing decision makers’ attitudes
in front of alternatives structured over multiple periods. The classical formulation of the
model assumes constant preferences over time, i.e., it assumes that individuals’ choices
are consistent. Empirical evidence, however, shows that individuals’ preferences do not
respond to this assumption, generating temporally inconsistent decisions. This paper
addresses the problem of temporal inconsistency in order to interpret and describe anomalous
choices, i.e., not rationalizable from a theoretical point of view, through the cognitive
distortions of the decision-maker. Indeed, even if we assume that the investor is a rational
subject, behavioral finance suggests that an anomaly is part of the human being and must
be recognized as a systematic condition of the decision-making process. Exploiting the
relationship between the rate of impatience and temporal preference, this work aims to
demonstrate that the degree of decrease in impatience quantifies the weight of emotional
drives in the anomalies of intertemporal choices. An experimental approach based on constructing
the hyperbolic factor for each individual in different contexts is presented to test
our results. The variability in the collected data highlights that individuals’ behavior is very
different, suggesting the need to project strategies in personalized finance
"AnnuityRIR": Annuity Random Interest Rates
No full textAnnuity Random Interest Rates proposes different techniques for the approximation of the present and final value of a unitary annuity-due or annuity-immediate considering interest rate as a random variable
A behavioral approach to inconsistencies in intertemporal choices with the Analytic Hierarchy Process methodology
No full textThe framework of this paper is behavioral finance and, more specifically, the analysis of the main anomalies (delay, magnitude and sign effects) present in the processes of intertemporal choice. To the extent of our knowledge, only the delay effect (also known as decreasing impatience) has been discriminated between moderately and strongly decreasing impatience. However, taking into account that anomalies must be explained from a psychological point of view, the main objective of this paper is to relate the aforementioned paradoxes with the four categories of temperaments (artisan, guardian, idealist and rational) by using the sixteen personality types derived from the Myers–Briggs Type Indicator and the Behavioral Investor Types. To do this, we will use the Analytic Hierarchy Process methodology in order to detect the different levels of impatience through the so-called hyperbolic factor. Indeed, the main contribution of this paper refers to an empirical application which complements the theoretical analysis
Intertemporal choice and nonadditive capitalization functions
No full textMany papers on finance are interested in studying the preferences of a certain group of individuals about the choice of several rewards available at different time instants. Usually these works are conducted from an experimental point of view by means of samples to be passed to a control group. One of the most important issues in this research is nonadditivity when describing the behavior in experimental intertemporal choice. For instance, subadditivity in behavioral finance means that a certain subject prefers to divide the duration of an investment as many times as possible because this choice leads to an increase in profitability. Another context is medical research on impulsivity and loss of self-control in drug-dependent patients because there is a relationship between impulsive decision-making in intertemporal choice and estimation of time duration. Here subadditivity appears when administering some drugs in a group of substance abusers because they can feel a slight improvement when the same dose is divided into several parts. The problem arising here is how to measure the degree of subadditivity or superadditivity perceived by a group of individuals who are not experts in finance or medicine, respectively. So, our research will be addressed from a nonlinearity of time-perception perspective. © 2010 Wiley Periodicals, Inc
Modeling the inconsistency in intertemporal choice: the generalized Weibull discount function and its extension
No full textThe aim of this paper is to obtain the family of the so-called generalized Weibull discount functions, introduced by Takeuchi (Game Econ Behav 71:456â478, 2011), by deforming the q-exponential discount function by means of the Stevensâ âpowerâ law. The obtained discount functions exhibit different degrees of inconsistency and so they can be classified according to the value of their characteristic deforming parameters. Moreover, we extend the construction of the generalized Weibull discount function starting from any discount function instead of the q-exponential discounting. In any case, the value of the parameter (Formula presented.) of these new discount functions is extended from (0, 1] to the union of the intervals (Formula presented.)
Approach of the value of an annuity when non-central moments of the capitalization factor are known: an R application with interest rates following normal and beta distributions
Full text linkThis paper proposes an expression of the value of an annuity with payments of 1 unit each when the interest rate is random. In order to attain this objective, we proceed on the assumption that the non-central moments of the capitalization factor are known. Specifically, to calculate the value of these annuities, we propose two different expressions. First, we suppose that the random interest rate is normally distributed; then, we assume that it follows the beta distribution. A practical application of these two methodologies is also implemented using the R statistical software
An original approach to anomalies in intertemporal choices through functional data analysis: Theory and application for the study of Hikikomori syndrome
Full text linkThe pattern of intertemporal preferences is related to critical behavioural aspects involving individuals' emotional and cognitive spheres. The characteristics of the discount function can provide a quantitative interpretation of pathological conditions, such as addiction, depression, and Attention Deficit Hyperactivity Disorder (ADHD). In the literature on intertemporal preferences, researchers commonly refer to parametric models, which are often characterized by structural limitations, mainly when behavioral anomalies manifest in the dynamics of choices. This paper proposes using Functional Data Analysis (FDA) as an innovative tool to analyze discount functions' characteristics and interpret intertemporal choices' anomalies, overcoming the limits of a completely parametric approach. To show the potential of FDA in studying intertemporal decisions, this research proposes a novel methodology for dealing with discount functions and a possible application to the so-called Hikikomori condition. The latter is a social phenomenon that has recently raised concerns and claimed the need for in-depth studies. Although the application focuses on an original implementation of the functional analysis of variance approach to capture possible differences between groups of curves, the main novelty of the paper lies in the methodology for treating discount functions via FDA in the context of intertemporal choices
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