New Economics Papers
on Neuroeconomics
Issue of 2009‒08‒16
four papers chosen by

  1. Hyperbolic Discounting Is Rational: Valuing the Far Future with Uncertain Discount Rates By J. Doyne Farmer; John Geanakoplos
  2. Theory of Values By Andreas Georgiadis; Alan Manning
  3. Policies from Evidence that Risk Starvation Causes Dementias and Depressions and May Contribute to a Range of Other Brain Morbidities By Robin Pope
  4. Rationality around the clock. Sleep and time-of-day effects on guessing game responses By David L. Dickinson; Todd McElroy

  1. By: J. Doyne Farmer (Sante Fe Institute); John Geanakoplos (Cowles Foundation, Yale University)
    Abstract: Conventional economics supposes that agents value the present vs. the future using an exponential discounting function. In contrast, experiments with animals and humans suggest that agents are better described as hyperbolic discounters, whose discount function decays much more slowly at large times, as a power law. This is generally regarded as being time inconsistent or irrational. We show that when agents cannot be sure of their own future one-period discount rates, then hyperbolic discounting can become rational and exponential discounting irrational. This has important implications for environmental economics, as it implies a much larger weight for the far future.
    Keywords: Hyperbolic discounting, Environment, Time consistent, Exponential discounting, Geometric random walk, Term structure of interest rates
    JEL: D91 G12
    Date: 2009–08
  2. By: Andreas Georgiadis; Alan Manning
    Abstract: Economists have a well-developed theory of value but the theory of why people hold thevalues they do is rudimentary at best. In spite of the fact that it is common to argue thatvalues are important, most work on values is normative and the positive theory of values isrelatively under- developed. In this paper we propose a simple yet general way to think aboutvalues - they are about how one trades-off one own's utility against that of others - and arguethat we can draw on the large literature on pro-social behavior for hypotheses on how peoplewill choose values. Then, using data from the UK's Citizenship Survey we show howmodels of self-interest, fairness, reciprocity and identity, can explain many of the patternsthat we observe in the data across a wide variety of values.
    Keywords: Values, Pro-Social Behaviour
    JEL: D63 Z13
    Date: 2009–07
  3. By: Robin Pope
    Abstract: In rich countries, the population percentage under drug therapy for depressions is rising rapidly decade by decade for children, adolescent and young adults with no evidence of any long term success for this chronic ailment. There is also in rich countries relative to most poor ones, for each age cohort, a dramatically higher incidence of dementias. This paper takes a fresh look at these evidences of happiness problems that are so much more prevalent in rich than poor countries...
    Keywords: brain morbidities; brain exercise; decision making; dementia; depression; environmental factors; risk processing; risk starvation; whiffs of danger; frequent, tiny, varied chances and challenges, damaging social security welfare, socio-economic changes, societal interactions, societal contributions, pharmaceutical advertising' pharmaceutical sponsorship
    Date: 2009–07
  4. By: David L. Dickinson; Todd McElroy
    Abstract: We administer a unique online version of the Guessing Game where subject responses are collected across all 24 hours of the day. While time-of-day itself does not affect guesses, when combined with a trait-level sleepiness measure and previous night sleep, adverse sleep states lead to responses significantly farther from equilibrium. These results have implications for shift workers and others whose constraints or choices lead to adverse sleep parameters. Key Words:
    JEL: C7 C9 J2
    Date: 2009

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