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A response to this article explained that although there may be no overall effect, within specific income groups, there are differences by age. Although age doesn’t affect high-income people’s time preferences, it does affect the low-income group. Younger, low-income people have higher discounting than older, low-income people.
Some argue that the only reason for discriminating against future generations is that these generations might cease to exist in the future. Thus the rate of time preference should equal zero since the probability for such a catastrophic event is so low (assumed to be 0.1% per year). [8] This infers that there is equal weight given to all ...
Revealed preference theory, pioneered by economist Paul Anthony Samuelson in 1938, [1] [2] is a method of analyzing choices made by individuals, mostly used for comparing the influence of policies [further explanation needed] on consumer behavior. Revealed preference models assume that the preferences of consumers can be revealed by their ...
Suppose we are given a preference relation R on utility profiles. R is a weak total order on utility profiles—it can tell us, given any two utility profiles, if they are indifferent or one of them is better than the other. A reasonable preference ordering should satisfy several axioms: [4]: 66–69 1.
The phenomenon of hyperbolic discounting is implicit in Richard Herrnstein's "matching law", which states that when dividing their time or effort between two non-exclusive, ongoing sources of reward, most subjects allocate in direct proportion to the rate and size of rewards from the two sources, and in inverse proportion to their delays. [8]
Single-peaked preferences are a class of preference relations. A group has single-peaked preferences over a set of outcomes if the outcomes can be ordered along a line such that: Each agent has a "best outcome" in the set, and; For each agent, outcomes that are further from his or her best outcome are preferred less.
An alternative way to use high–low pricing is to increase the price for a short time, sometimes as much as 500 per cent, after which it is "discounted" to what its normal selling price. [4] After the price is reduced to the "sale" price, it may often stay at that price for a long time, sometimes longer than two weeks, after which customers ...
National accounts can be presented in nominal or real amounts, with real amounts adjusted to remove the effects of price changes over time. [11] A corresponding price index can also be derived from national output. Rates of change of the price level and output may also be of interest.