Decisions in financial economics: An experimental study of discount rates

Using three subsamples of subjects that differ in their level of formal education and knowledge in economics, this experimental study of intertemporal discount rates finds that subjective discount rates decrease with the time delay and monetary sum, and are higher for postpone-a-receipt than for a postpone-a-payment scenario. The findings indicate the existence of market segmentation, implicit risk and a weak added compensation. The findings also imply that subjective discount rates are lower and closer to real market rates of interest for subjects having higher levels of formal education and economics knowledge.