Obviously, if I’m going to die unless I eat that apple in the next ten minutes, the apple has extremely high value now and zero after 10 minutes.
Extending that idea, you are integrating across all the probabilities that the apple will become useless or reduce in value between now and when you’re going to get it.
Why is it exponential? Maybe stretching a bit, but I would guess that the apple changes in value according to a poisson process 1 where the dominating force is “the apple becomes useless to you”.
Obviously, if I’m going to die unless I eat that apple in the next ten minutes, the apple has extremely high value now and zero after 10 minutes.
Right, but this is a special case and not an argument for a general discount rate.
Extending that idea, you are integrating across all the probabilities that the apple will become useless or reduce in value between now and when you’re going to get it.
Yes, heuristic-based discount rates like this (e.g. due to general uncertainty) are helpful and should be applied when necessary. But that’s different from just a utility discount rate (i.e. future identical events are just less valuable).
Why is it exponential? Maybe stretching a bit, but I would guess that the apple changes in value according to a poisson process [1] where the dominating force is “the apple becomes useless to you”.
Obviously, if I’m going to die unless I eat that apple in the next ten minutes, the apple has extremely high value now and zero after 10 minutes.
Extending that idea, you are integrating across all the probabilities that the apple will become useless or reduce in value between now and when you’re going to get it.
Why is it exponential? Maybe stretching a bit, but I would guess that the apple changes in value according to a poisson process 1 where the dominating force is “the apple becomes useless to you”.
Right, but this is a special case and not an argument for a general discount rate.
Yes, heuristic-based discount rates like this (e.g. due to general uncertainty) are helpful and should be applied when necessary. But that’s different from just a utility discount rate (i.e. future identical events are just less valuable).
Sure :)