discounting

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discounting

A business term for multiplying an amount by a discount rate to determine its present (“discounted”) value. The term has been broadly applied to geriatrics in the NHS and can be defined as the reduction in the costs and benefits of treatment by a fixed annual amount to take into account the declining “value" of an ageing patient over time.
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References in periodicals archive ?
This study uses a computer game-like task to investigate the effects of interest and inflation rates on delay discounting in human behavior.
The purpose of Experiment 1 was to investigate the effect of the inflation rate on delay discounting when the nominal interest rate is constant.
None of the participants had previously taken courses in behavior analysis, and none had previously participated in experiments on delay discounting.
The curved lines represent the hyperbolic discounting functions (Equation 1), fitted to the median data of deflationary (k = 0.012, [R.sup.2] = 0.962), zero-inflationary (k = 0.018, [R.sup.2] = 0.991), and inflationary (k = 0.024, [R.sup.2] = 0.996) conditions.
To quantify differences in discounting under the various conditions, the area under the curve of observed subjective values was calculated for each participant under each condition (Myerson, Green, Hanson, Holt, & Estle, 2003; Myerson, Green, & Warusawitharana, 2001).
These results suggest that inflation rate has an effect on the discounting of delayed rewards, although objectively, the delay discounting behavior that maximizes purchasing power is the same at any inflation rate.
Although Experiment 1 showed that inflation rate has an effect on discounting behavior, it is possible that the nominal interest rate does not affect delay discounting.
The discounting of delayed rewards will be strong as the nominal interest rate increases.
The curved lines represent hyperbolic discounting functions (Equation 1), fitted to the median data of 0% (k = 0.002, [R.sup.2] = 0.485), 0.5% (k = 0.013, [R.sup.2] = 0.892), and 1.5% (k = 0.022, [R.sup.2] = 0.519) conditions.
The areas under the curve for objective discounting, calculated from the exponential discounting curve, were 0.774 for the 1.5% condition, 0.915 for the 0.5% condition, and 1 for the 0% condition.
These results suggest that nominal interest rate has an effect on discounting of delayed rewards.
Experiments 1 and 2 showed that both inflation and nominal interest rates affect subjective delay discounting. The purpose of Experiment 3 was to investigate the effect on delay discounting of different combinations of nominal interest and inflation rates that yield the same real interest rate.