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The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing

  • person

    Gonzalo Edwards; 

  • class Documento de Trabajo IE-PUC, N° 227, 2002

Abstract: This paper shows that exponential discounting may have anadvancing effect on the timing of investment, not captured bysensitivity analysis carried out for the complete range of instantaneous discount rates implicit in declining discounting.

Keywords: Declining discounting, exponential discounting, hyperbolic discounting, investment timing, project evaluation
JEL: D90, H43.

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