Weighted discounting—On group diversity, time-inconsistency, and consequences for investment

Sebastian Ebert*, Wei Wei, Xun Yu Zhou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)
120 Downloads (Pure)


This paper presents the class of weighted discount functions, which contains the discount functions commonly used in economics and finance. Weighted discount functions may describe the discounting behavior of groups, uncertainty about what discount rate to use, present-biased time preferences, and all of these simultaneously. As an application, we study investment behavior under weighted discounting and come up with the following general result: Greater group diversity, greater parameter uncertainty, and more present-biased time preferences lead to delayed investment or, equivalently, more risk-taking.

Original languageEnglish
Article number105089
JournalJournal of Economic Theory
Early online date2 Jul 2020
Publication statusPublished - Sept 2020


  • Diversity
  • Hyperbolic discounting
  • Investment
  • Parameter uncertainty
  • Time inconsistency
  • Weighted discounting

ASJC Scopus subject areas

  • Economics and Econometrics


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