Present Value and Gossen's First Law - A Case Study
DOI:
https://doi.org/10.18559/s4rmcc51Keywords:
Risk, Case study, MoneyAbstract
The main aim of this study was to verify the existence of an economically justified non-additive present value function. The study assumed the validity of the principle of the diminishing marginal utility of wealth. Two types of constant risk aversion coefficients were considered: the absolute coefficient and the relative coefficient. As a result, two different models for discounting functions were obtained. The formal influence of behavioural factors on the discount rate has been demonstrated.
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