Question: Suppose & is defined for a year and that a year is 365 days, while B is defined for a time unit of a

Suppose & is defined for a year and that a year is 365 days, while B is defined for a time unit of a day, so

Suppose & is defined for a year and that a year is 365 days, while B is defined for a time unit of a day, so that anything that is in the future for the purpose of the question is discounted by B (be it a day from now or a year from now), times the relevant amount of 8(i.e.Stimes in years). Eric is participating an experiment on time preference and asked: how much money tomorrow makes you indifferent with 10 dollars right now? (a) Assume Eric is an exponential discounter. What is Eric's implied yearly discount factor given his answer? (b) Assume Eric is a quasi-hyperbolic discounter with B = 0.91. What is Eric's implied yearly discount factor given his answer? (c) Eric is further asked the question: how much money two years from now makes you indifferent with 100 dollars one year from now? What would Eric have answered if he was in fact an exponential discounter?

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