Editing Time preference (section)

=== Exponential discounted utility ===
Exponential discounted utility was first described in the discounted utility model. The equation is as follows:

<math>U^t(c_t, \dots, c_T) = \sum_{k=0}^{T-t} D(k) u(c_{t+k})</math>

where

<math>D(k) = \left(\frac{1}{1 + \rho}\right)^k
</math>

is commonly thought of as the discount function, with <math>\rho</math>  being the discount rate.<ref name=":0" /> It says that your value of the future is exponentially less than your value of the present, as scaled by <math>\rho</math> and <math>k</math> . Although the equation was never meant to be ''normative'', ie, making a recommendation as to how people behave, it was the first template for modeling utility over time. Later, its ''descriptive'', validity, or ability to describe how people actually behave, was evaluated. Inconsistencies led to the theorizing of a new equation for time preference.