Discounting models for long-term decision making

Autor:	C. Robert Kenley, Donald C. Armstead
Rok vydání:	2003
Předmět:	Decision support system Discounting Actuarial science Operations research Computer Networks and Communications media_common.quotation_subject Trade study Time horizon Hyperbolic discounting Net present value Interest rate Hardware and Architecture Intergenerational equity Economics media_common
Zdroj:	Systems Engineering. 7:13-24
ISSN:	1520-6858 1098-1241
DOI:	10.1002/sys.10051
Popis:	This paper investigates alternative approaches to constant rate discounting for calculation of Net Present Value (NPV) in life cycle cost models that are used for engineering trade studies. Alternative approaches are necessary to meet the challenge of equitable intergenerational resource allocation for projects like radioactive waste disposal that have a life cycle that impacts future generations well beyond the 30-year maximum time horizon limit that results from using market-determined interest rates on bonds. This paper reviews the literature on long-term discount models, provides a consistent nomenclature for describing the models, summarizes the theoretical and empirical basis for hyperbolic discounting models, evaluates the research results to date, and provides a recommendation for applying hyperbolic discounting. It also identifies issues with the current U.S. government policy on discounting and the future research necessary to establish an improved foundation for discounting models for long-term projects. © 2003 Wiley Periodicals, Inc. Syst Eng 7: 13–24, 2004
Databáze:	OpenAIRE
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