Discounting, Values, and Decisions

摘要: How do discount rates affect agents’ decisions and valuations? This paper provides a general method to analyze this question, allowing stochastic managed cash flows, rates, time inconsistency including arbitrary learning payoff or utility processes. We show that some of these features can lead counterintuitive answers (e.g., “a more patient agent stops earlier”), but we also establish, under simple conditions, theorems yielding robust predictions concerning the impact on control stopping valuations. apply our theory models search, experimentation, bankruptcy, optimal growth, investment, social learning.