Exponential Discounting

Most of us seem to agree that the promise of a dollar in the future is worth less to us than a dollar today, even if the promise is certain to be fulfilled. Economists often assume ‘exponential discounting’, which says that a dollar promised at some time is worth

dollars in hand at time The constant is connected to the ‘interest rate’.

Why are economists so wedded to exponential discounting? The main reason is probably that it’s mathematically simple. But one argument for it goes roug...