The improving sequence effect on monetary sequences

Heliyon

Salvador Cruz Rambaud¹  María José Muñoz Torrecillas²  Adriana Garcia³ 

[1] Corresponding author.;Department of Economics and Business, Universidad de Almería, Spain;Department of Economics, Econometrics and Finance, University of Groningen, the Netherlands;

关键词: Intertemporal choice;    Improving sequence effect;    Valuation model;    Income sequence;    Present value maximization principle;    Social sciences;   

DOI  :  

来源: DOAJ

【 摘 要 】

Experimental studies reveal a preference for improving income sequences, challenging the axioms of the discounted utility model, such as the present value maximization principle. Through an experiment, we test the existence of this anomaly on short and long-term income sequences, by confirming previous experimental evidence. Although the participants are aware of the present value maximization, they select improving sequences of income mainly to cover their future spending needs, to feel motivation at work, and to receive a signal of success and status. In order to include this sequence effect in a mathematical valuation model, we propose an alternative model to value sequences which outperforms the traditional discounting model by fitting the present value with the preferences of the participants.

【 授权许可】

Unknown