C&LH 4-09 - 1 4/09 Value discounting...

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4/09 Value discounting function —hyperbolic (positively accelerated curve) The rule: Anytime there is a delay to receive the X, its Xing value is reduced. The greater the delay, the less is subjective or perceived value of the X to you; so a large X gets subjectively smaller the longer you wait for it, and if the delay is sufficiently long, then you will choose the small immediate reward b/c its M[agnitude] is of greater subjective value. "TIME IS MONEY. ..or rat pellets. ...)" Why ever take a small immediate X? Answer: The longer the delay, the less the subjective value of the big X. V= value; positively related to magnitude and inversely related to delay V = M/(1+KD) V= value of X M= magnitude of X D=delay; K=discounting parameter ( rate of decline of V: x/time ) V = M/(1+KD) If no delay : V = X mag/1+0; or V=M/1 or V = M. [if M =10, then V = 10/1 or V = 10] Example 1 : Suppose instead of 0, the delay = 10 sec, K = .5/sec, & M = 10? V = M/(1+KD)
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This note was uploaded on 04/05/2008 for the course PSYCH 311 taught by Professor Rovee-collier during the Spring '06 term at Rutgers.

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C&LH 4-09 - 1 4/09 Value discounting...

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