Some theory coming up

HYPERBOLIC DISCOUNTING IS RATIONAL:
VALUING THE FAR FUTURE WITH UNCERTAIN DISCOUNT RATES

J. Doyne Farmer and John Geanakoplos 

My current reading material about how we value the future. For example, when will you go grocery shopping next? Depends on how much food you have in the house. Normally we shop once a week. If you just shopped, then there is no gain from shopping for the next few days. However when the kitchen foodstuff approaches the reserve level, there is a much bigger gain from shopping tomorrow.

So the idea is that we leave some imprecision in our shopping habits, about 15% of food inventory is reserve. This means the what economists call the discount rate on the value of shopping from one day to the next is not uniform.

This author goes through some math to see what happens to a yield curve under the assumption that day to day discounting of money is not constant. I will use Shannon theory of course, and reach a similar conclusion, but my conclusion will apply to all inventory, not just money balances.