In other words, wealth inequality in the benchmark results is mainly driven by wealth preference and the heterogeneity in discount factors
a)" is an individual whose discount factor
is [delta](a), but that believes that it is [?
Again, we find that the only way to rationalize the hedged and unhedged payoffs is to characterize the peso event as one that involves moderate losses but a high value of the stochastic discount factor
The first increases the serial correlation coefficient in the law of motion for the preference discount factor
We first define the critical discount factor
below which bidders are considered impatient.
Now we analyze selected ranges for the discount factor
, DF, and out of this point we can infer selected ranges for the implicit discount rate, DR.
The estimation procedure is based on some arbitrary functional form linking the discount factor
to the explanatory variables.
The answer is no if the representative consumer's preferences are usual ones assumed by macroeconomists--for example, time-separable logarithmic preferences with discount factor
[beta] [member of] (0, 1).
Assuming that firms have the same discount factor
, [delta] [member of] (0, 1), a firm's defection incentive (DI) is given by
Since applications with unequal discount factors
[4, 5] are relatively rare and it is unclear how to solve them with model-free methods, we will only consider MDPs with several criteria each based on its own reward function, but using a common discount factor
Higher, more uncertain interest rates imply a lower discount factor
and hence lower equities prices.
Modern asset pricing theory posits the existence of a stochastic discount factor
A further advantage is that should you die within the seven years the investment will be reduced by a discount factor
for IHT purposes.
All figures are 000s [pounds sterling] except discount factor
where 0 < [beta] < 1 is the annual discount factor