A naive justification of hyperbolic discounting from mental algebraic operations and functional analysis

Salvador Cruz Rambaud; Jorge Hernandez-Perez; Salvador Cruz Rambaud; Jorge Hernandez-Perez

doi:10.3934/QFE.2023023

Quantitative Finance and Economics

2023, Volume 7, Issue 3: 463-474. doi: 10.3934/QFE.2023023

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Research article

A naive justification of hyperbolic discounting from mental algebraic operations and functional analysis

Departamento de Economía y Empresa, University of Almería, La Cañada de San Urbano, s/n, 04120, Almería, Spain

Received: 09 July 2023 Revised: 27 August 2023 Accepted: 08 September 2023 Published: 14 September 2023
JEL Codes: C02, D91, G40

Background
Intertemporal decision-making, which involves making choices between outcomes at different time points, is a fundamental aspect of human behavior. Understanding the underlying mental processes is vital for comprehending the complexities of human decision-making and choice behavior.

Objective
The main objective of this study is to investigate the interplay of mental processes, specifically cognitive evaluation, subjective valuation, and comparison, in the context of intertemporal decision-making, with a specific focus on understanding the discounting process.

Methodology
Development of a mathematical representation of the discounting process that incorporates the mental processes associated with intertemporal decision-making.

Result
Our findings indicate that hyperbolic discounting aligns well with the cognitive processes underlying intertemporal decision-making. Subsequent research will employ qualitative questionnaires to establish the discount function relevant to specific groups, thereby enhancing our comprehension of the discounting process within intertemporal decision-making.
- discount function,
- intertemporal choice,
- hyperbolic discounting,
- mental operations,
- functional analysis
Citation: Salvador Cruz Rambaud, Jorge Hernandez-Perez. A naive justification of hyperbolic discounting from mental algebraic operations and functional analysis[J]. Quantitative Finance and Economics, 2023, 7(3): 463-474. doi: 10.3934/QFE.2023023

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Abstract

Background

Intertemporal decision-making, which involves making choices between outcomes at different time points, is a fundamental aspect of human behavior. Understanding the underlying mental processes is vital for comprehending the complexities of human decision-making and choice behavior.

Objective

The main objective of this study is to investigate the interplay of mental processes, specifically cognitive evaluation, subjective valuation, and comparison, in the context of intertemporal decision-making, with a specific focus on understanding the discounting process.

Methodology

Development of a mathematical representation of the discounting process that incorporates the mental processes associated with intertemporal decision-making.

Result

Our findings indicate that hyperbolic discounting aligns well with the cognitive processes underlying intertemporal decision-making. Subsequent research will employ qualitative questionnaires to establish the discount function relevant to specific groups, thereby enhancing our comprehension of the discounting process within intertemporal decision-making.

References

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