Homework 2 How good is the Exponential Function Discounting Formula? An Experimental Study.

Homework 2 How good is the Exponential Function Discounting recipe? An Experimental Study. We studies in financial economics and behavioral pay always strive to explain various anomalies documented in the observational literature. Recently, Loewenstein and ODonoghue wide review study of time neglecting, they come to buy the farmher the displace receipts model have little empirical support. One of the anomalies, they note, is the declining-discount- rates moment established in the economic mental science literature, and often referred to as hyperbolic time discounting. In a recent survey of investor psychology and asset pricing, data-based studies of inter-temporal choice derive prejudiced discount rates by applying the exponential usage to the sum of gold in the subjects benefit-cost responses. However, studies in psychology question the ability of subjects to approximate the exponential function correctly. One such anomaly describe in the experimental literature is the negative relationship amid the time and the sum of the change flow and the derived (implicit) subjective discount rates. This is anomalous because the impact of these deuce factors, time and sum, on existent capital market engagement rates is generally positive.

The excogitation for the present study hence is threefold: (1) to estimate the stage of the EF misevaluation and its variation with a effrontery product price aim and its expected growth rate; 2) to examine whether such early(a) mathematical functions as linear, quadratic and cube-shaped functions, conform to the discounting and heighten process of individual decision makers; and (3) to suss out the impact of p ersonalized characteristics. Finally, regre! ssion results demonstrate no statistically significant correlation between the exponential function (EF) subjective misevaluation coefficient and such personal characteristics, as sex, age, having a savings aim and investing in capital market securities. This result implies that the EF misevaluation is big-shouldered; personal differences be of no significant consequence. If you want to get a spacious essay, order it on our website: OrderEssay.net

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