Implementing fisher Black's simple discounting rule

We propose a simple implementation of Black’s (1988) elegant rule for discounting uncertain future cash flows. Black’s rule avoids the thorny problem of estimating an appropriate risk-adjusted discount rate. Instead, the rule calls for discounting conditional mean cash flows at appropriate riskless interest rates. Our contribution in this article is to describe and illustrate a method of estimating the conditional mean cash flows called for in Black’s rule. The method is quite flexible with respect to the types of information available concerning the distributions of future cash flows. We argue that this approach to computing present values offers a theoretically sound and generally feasible addition to the toolbox of financial managers.

Delay discounting task in pigs reveals response strategies related to dopamine metabolite.

We developed a novel delay discounting task to investigate outcome impulsivity in pigs. As impulsivity can affect aggression, and might also relate to proactive and reactive coping styles, eight proactive (HR) and eight reactive (LR) pigs identified in a manual restraint test ("Backtest", after Bolhuis et al., 2003) were weaned and mixed in four pens of four unfamiliar pigs, so that each pen had two HR and two LR pigs, and aggression was scored in the 9h after mixing. In the delay discounting task, each pig chose between two levers, one always delivering a small immediate reward, the other a large delayed reward with daily increasing delays, impulsive individuals being the ones discounting the value of the large reward quicker. Two novel strategies emerged: some pigs gradually switched their preference towards the small reward ('Switchers') as predicted, but others persistently preferred the large reward until they stopped making choices ('Omitters'). Outcome impulsivity itself was unrelated to these strategies, to urinary serotonin metabolite (5-HIAA) or dopamine metabolite (HVA) levels, aggression at weaning, or coping style. However, HVA was relatively higher in Omitters than Switchers, and positively correlated with behavioural measures of indecisiveness and frustration during choosing. The delay discounting task thus revealed two response strategies that seemed to be related to the activity of the dopamine system and might indicate a difference in execution, rather than outcome, impulsivity.

Does ‘better’ discounting lead to ‘worse’ outcomes in long-run decisions? The dilemma of hyperbolic discounting

The shortcomings of conventional discounting, especially in the context of long-run environmental problems, have been extensively discussed in the literature. Recently, hyperbolic discounting, i. e. discounting at declining instead of constant discount rates, has attracted a lot of interest among both scientists and politicians. Although there are compelling arguments for employing hyperbolic discounting, there are also pitfalls, which have to be pointed out. In this paper I show that the problem of time-inconsistency, an inherent characteristics of hyperbolic discounting, leads to a potential clash between economic efficiency and intergenerational equity. As an example, I refer to the weak progress in the controlling of greenhouse gas emissions under the Kyoto protocol. As the problem of time-inconsistency cannot be solved on economic grounds alone, there is a need for an intergenerational moral commitment.

Leiomyomatoid angiomatous neuroendocrine tumor (LANT) of the pituitary: a distinctive biphasic neoplasm with primitive secretory phenotype and smooth muscle-rich stroma

We describe a hitherto undocumented variant of dimorphic pituitary neoplasm composed of an admixture of neurosecretory cells and profuse leiomyomatous stroma around intratumoral vessels. Radiologically perceived as a macroadenoma of 3.8 cm in diameter, this pituitary mass developed in an otherwise healthy 43-year-old female. At the term of a yearlong history of amenorrhea and progressive bitemporal visual loss, subtotal resection was performed via transsphenoidal microsurgery. Discounting mild hyperprolactinemia, there was no evidence of excess hormone production. Histologically, solid sheets, nests and cords of epithelial-looking, yet cytokeratin-negative cells were seen growing in a richly vascularized stroma of spindle cells. While strong immunoreactivity for NCAM, Synaptophysin and Chromogranin-A was detected in the former, the latter showed both morphological and immunophenotypic hallmarks of smooth muscle, being positive for vimentin, muscle actin and smooth muscle actin. Architectural patterns varied from monomorphous stroma-dominant zones through biphasic neuroendocrine-leiomyomatous areas, to pseudopapillary fronds along vascular cores. Only endothelia were labeled with CD34. Staining for S100 protein and GFAP, characteristics of sustentacular cells, as well as bcl-2 and c-kit was absent. Except for alpha-subunit, anterior pituitary hormones tested negative in tumor cells, as did a panel of peripheral endocrine markers, including serotonin, somatostatin, calcitonin, parathormone and vasoactive intestinal polypeptide. Mitotic activity was absent and the MIB-1 labeling index low (1-2%). While assignment of this lesion to any established neoplastic entity is not forthcoming, we propose it is being considered as a low-grade neuroendocrine tumor possibly related to null cell adenoma.

"Exterritorial" lymphocytic hypophysitis within an ovarian teratoma during pregnancy: a possible sentinel lesion?

Pituitary tissue is rarely to be found among the constituents of ovarian teratomas (dermoid cysts). In some exceptional cases, however, such ectopic pituitary anlagen may even give rise to secondary organ-specific pathologies. Akin to those of the pituitary in its natural location, these tend to be adenomas. We describe a unique example of lymphocytic hypophysitis incidentally encountered in a mature left ovarian teratoma from a 30-year-old woman in the 19th week of pregnancy. Amidst various fully differentiated derivatives of all three embryonic layers, the cyst wall also included a miniature replica of the anterior pituitary lobe 0.5 cm in diameter. While a full set of adenohypophyseal hormone-producing cell types could be identified, there was characteristic pregnancy-related hyperplasia of lactotrophs. This was further overlaid by prominent mononuclear inflammation, including infiltration by T lymphocytes, follicular aggregates of B cells, and attendant destruction of parenchyma. There was no significant inflammatory reaction elsewhere. Discounting the non-standard location, the ensemble of the clinical setting and histology were felt to be indistinguishable from the classical paradigm of lymphocytic hypophysitis complicating pregnancy. To date, lymphocytic thyroiditis is the sole form of organ-specific inflammatory process within an ovarian teratoma on record. By analogy, we hypothesize that this ectopic manifestation of immune-mediated inflammation of pituitary parenchyma may possibly be read as a preclinical sentinel lesion of lymphocytic hypophysitis.

Why Some People Discount More than Others: Baseline Activation in the Dorsal PFC Mediates the Link between COMT Genotype and Impatient Choice

Individuals differ widely in how steeply they discount future rewards. The sources of these stable individual differences in delay discounting (DD) are largely unknown. One candidate is the COMT Val158Met polymorphism, known to modulate prefrontal dopamine levels and affect DD. To identify possible neural mechanisms by which this polymorphism may contribute to stable individual DD differences, we measured 73 participants' neural baseline activation using resting electroencephalogram (EEG). Such neural baseline activation measures are highly heritable and stable over time, thus an ideal endophenotype candidate to explain how genes may influence behavior via individual differences in neural function. After EEG-recording, participants made a series of incentive-compatible intertemporal choices to determine the steepness of their DD. We found that COMT significantly affected DD and that this effect was mediated by baseline activation level in the left dorsal prefrontal cortex (DPFC): (i) COMT had a significant effect on DD such that the number of Val alleles was positively correlated with steeper DD (higher numbers of Val alleles means greater COMT activity and thus lower dopamine levels). (ii) A whole-brain search identified a cluster in left DPFC where baseline activation was correlated with DD; lower activation was associated with steeper DD. (iii) COMT had a significant effect on the baseline activation level in this left DPFC cluster such that a higher number of Val alleles was associated with lower baseline activation. (iv) The effect of COMT on DD was explained by the mediating effect of neural baseline activation in the left DPFC cluster. Our study thus establishes baseline activation level in left DPFC as salient neural signature in the form of an endophenotype that mediates the link between COMT and DD.

Analysis of hand kinematics reveals inter-individual differences in intertemporal decision dynamics

During intertemporal decisions, the preference for smaller, sooner reward over larger-delayed rewards (temporal discounting, TD) exhibits substantial inter-subject variability; however, it is currently unclear what are the mechanisms underlying this apparently idiosyncratic behavior. To answer this question, here we recorded and analyzed mouse movement kinematics during intertemporal choices in a large sample of participants (N = 86). Results revealed a specific pattern of decision dynamics associated with the selection of “immediate” versus “delayed” response alternatives, which well discriminated between a “discounter” versus a “farsighted” behavior—thus representing a reliable behavioral marker of TD preferences. By fitting the Drift Diffusion Model to the data, we showed that differences between discounter and farsighted subjects could be explained in terms of different model parameterizations, corresponding to the use of different choice mechanisms in the two groups. While farsighted subjects were biased toward the “delayed” option, discounter subjects were not correspondingly biased toward the “immediate” option. Rather, as shown by the dynamics of evidence accumulation over time, their behavior was characterized by high choice uncertainty.

Does Trauma Impair Self-Control? Differences in Delaying Gratification Between Former Indentured Child Laborers and Nontraumatized Controls.

Traumatic experiences may affect an individual's ability to exercise self-control, which is an essential characteristic for successfully managing life. As a measure of self-control, we used the delay discounting paradigm, that is, the extent to which a person devalues delayed gratification. The aim of this study was to investigate the relationship between childhood trauma and delay discounting using a control group design with elderly participants with a mean age of 76.2 years. Swiss former indentured child laborers (n=103) who had been exposed to trauma during their childhood were compared with nontraumatized controls (n=50). The trauma exposure group showed a considerably higher preference for immediate smaller rewards than the controls, indicating their lower self-control. A hierarchical regression analysis revealed that a history of abuse, current self-efficacy, and education were significantly associated with delay discounting. Implications for future research are discussed.