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Echenique, Federico; Imai, Taisuke; Saito, Kota (January 2018): Testable Implications of Models of Intertemporal Choice. Exponential Discounting and Its Generalizations.
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Abstract

[This paper subsumes the paper "Testable Implication of Exponential Discounting" (2014) circulated as Caltech Social Science Working Paper 1381.] We present the first revealed-preference characterizations of the most common models of intertemporal choice: the model of exponentially discounted concave utility, and some of its generalizations. Ours is the first axiomatization of these models taking consumption data as primitives. Our characterizations provide non-parametric revealed-preference tests. We apply our test to data from a recent experiment, and find that our axiomatization delivers new insights and perspectives on a dataset that had been analyzed by traditional parametric methods.