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A Closer Look at the Yardstick: A New Discount Rate Measure with Precision and Range
Author(s) -
Yoon Haewon,
Chapman Gretchen B.
Publication year - 2016
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.1890
Subject(s) - yardstick , measure (data warehouse) , range (aeronautics) , econometrics , economics , intertemporal choice , discounting , task (project management) , computer science , mathematics , data mining , finance , materials science , geometry , management , composite material
In intertemporal choice research, choice tasks (i.e., choosing between $80 today and $100 in a year) are often used to elicit a discount rate. The discount rate derived from a choice task, however, is largely restricted by the granularities and ranges of the questions asked. We examined this restriction in three popular discount rate measurements using simulations and experiments, and we propose an alternative procedure (Three‐option Adaptive Discount rate measure (ToAD)), which is capable of measuring a wide range of discount rates (from approximately .035% to 350 000% annual percentage rate) with high precision using 10 questions, in under a minute. ToAD can be easily implemented in online surveys (i.e., Qualtrics). Copyright © 2015 John Wiley & Sons, Ltd.