Jack discounts the future, but you don't know what his discount factor is (it could be

Jack discounts the future, but you don't know what his discount factor β is (it could be anywhere between 0 and 1). Suppose you gave Jack a choice between two options. 

• Under option A, Jack gets $200 today. 
• Under option B, Jack gets $100 today and $105 exactly one year from today.

Jack decides to go with option B. Is Jack's discount factor less than 0.9, equal to 0.9 or more than 0.9? (If you conclude there is insufficient information to answer the above question, explain why.)

Answer rating: 100% (QA)

Based on Jacks choice we can infer information about his dis... View the full answer