Fall 2020 Colloquium Series - 30 October
Craig Callender, UC San Diego :: "Why Did Past-Me Say He’d Give a Talk on Future Discounting? Is Hyperbolic Discounting Irrational?"
Friday, October 30th at 3:30pm PDT | online
Abstract: Decisions demand that we compare the value of outcomes now versus outcomes later. Should I have the last piece of cake tonight or tomorrow? Lower carbon emissions now or later suffer greater climate impacts? Intertemporal decisions have triggered hundreds of studies across many fields, including finance, addiction, nutrition, marketing, and environmental conservation. Studies find that we tend to prefer positive goods to be delivered sooner rather than later. We discount the future. A compelling paradigm for understanding this behavior exists. It begins with a normative standard from economics called exponential discounting. Psychologists and behavioral economists inform us that we in fact discount hyperbolically and interpret this behavior as sub-optimally. But is discounting non-exponentially really irrational? My talk has good news and bad news for the standard assumption. The good news is that in a completely new argument I’ll derive the rationality of exponential discounting from the philosophical thesis of temporal neutrality. The bad news is that this increased clarity helps us understand important flaws in the standard paradigm.