AREA UNDER THE CURVE AS A MEASURE OF DISCOUNTING

AREA UNDER THE CURVE AS A MEASURE OF DISCOUNTING

2001, 76, 235–243 NUMBER 2 (SEPTEMBER) | JOEL MYERSON, LEONARD GREEN, AND MISSAKA WARUSAWITHARANA
The article introduces a novel approach to measuring discounting, which is the phenomenon where the subjective value of a delayed or probabilistic reward decreases compared to an immediate reward of the same nominal amount. The proposed method calculates the area under the empirical discounting function, avoiding the issues associated with theoretical models and their parameter estimates. This approach is theoretically neutral, easy to apply to both individual and group data, and provides a simple, univariate measure of discounting. The area measure circumvents statistical problems caused by skewed distributions of discounting parameters, allowing for parametric statistical analysis. The method is validated through a repeated measures ANOVA, showing significant effects of reward type and amount on discounting. The area measure has advantages over traditional methods, such as being theoretically flexible and avoiding the need for specific theoretical assumptions. However, it has limitations, including the inability to directly compare areas from different experiments without adjusting for the range of the independent variable. The authors conclude that the area-under-the-curve measure is a valuable tool for analyzing discounting behavior, particularly in situations where complex theoretical models are not feasible.The article introduces a novel approach to measuring discounting, which is the phenomenon where the subjective value of a delayed or probabilistic reward decreases compared to an immediate reward of the same nominal amount. The proposed method calculates the area under the empirical discounting function, avoiding the issues associated with theoretical models and their parameter estimates. This approach is theoretically neutral, easy to apply to both individual and group data, and provides a simple, univariate measure of discounting. The area measure circumvents statistical problems caused by skewed distributions of discounting parameters, allowing for parametric statistical analysis. The method is validated through a repeated measures ANOVA, showing significant effects of reward type and amount on discounting. The area measure has advantages over traditional methods, such as being theoretically flexible and avoiding the need for specific theoretical assumptions. However, it has limitations, including the inability to directly compare areas from different experiments without adjusting for the range of the independent variable. The authors conclude that the area-under-the-curve measure is a valuable tool for analyzing discounting behavior, particularly in situations where complex theoretical models are not feasible.
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