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DIMINISHING MARGINAL VALUE AS DELAY DISCOUNTING
Author(s) -
Rachlin Howard
Publication year - 1992
Publication title -
journal of the experimental analysis of behavior
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.75
H-Index - 61
eISSN - 1938-3711
pISSN - 0022-5002
DOI - 10.1901/jeab.1992.57-407
Subject(s) - discounting , marginal utility , marginal value , economics , value (mathematics) , consumption (sociology) , commodity , addiction , microeconomics , delay discounting , marginal cost , econometrics , psychology , statistics , mathematics , neuroscience , market economy , social science , finance , sociology
The fundamental law underlying economic demand and exchange is the tendency for value of marginal units to diminish with increasing amounts of a commodity. The present paper demonstrates that this law follows from three still‐more‐basic psychological assumptions: (a) limited consumption rate, (b) delay discounting, and (c) choice of highest valued alternative. Cases of diminishing marginal value apparently due to pure intensity of reward may plausibly be attributed to the above three factors. The further assumption that maximum consumption rate may vary within and across individuals implies that some substances may be unusually addictive and that some individual animals may be unusually susceptible to addiction.