Wei_Dai comments on Rationalists don't care about the future - Less Wrong

3 Post author: PhilGoetz 15 May 2011 07:48AM

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Comment author: Wei_Dai 15 May 2011 10:42:02PM 0 points [-]

My (admittedly sketchy) understanding of the argument for exponential discounting is that any other function leaves you vulnerable to a money pump, IOW the only rational way for a utility maximizer to behave is to have that discount function. Is there a counter-argument?

I guess you're referring to this post by Eliezer? If so, see the comment I just made there.

Comment author: dspeyer 17 May 2011 03:36:26PM 0 points [-]

Do things become any clearer if you figure that some of what looks like time-discounting is actually risk-aversion with regard to future uncertainty? Ice cream now or more ice cream tomorrow? Well tomorrow I might have a stomach bug and I know I don't now, so I'll take it now. In this case, changing the discounting as information becomes available makes perfect sense.

Comment author: Wei_Dai 17 May 2011 04:29:52PM 2 points [-]

Yes, there's actually a literature on how exponential discounting combined with uncertainty can look like hyperbolic discounting. There are apparently two lines of thought on this:

  1. There is less hyperbolic discounting than it seems. What has been observed as "irrational" hyperbolic discounting is actually just rational decision making using exponential discounting when faced with uncertainty. See Can We Really Observe Hyperbolic Discounting?
  2. Evolution has baked hyperbolic discounting into us because it actually approximates optimal decision making in "typical" situations. See Uncertainty and Hyperbolic Discounting.
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