We do not claim that a multivocality frame directly alters valuation calculations per se , but, rather, it informs and conditions how materiality is defined and the contexts in which risk and value are calculated.
Next, we set out our first solution to static discount rates: dynamic discount rates.
Dynamic Discount Rates
A multivocality approach frames investment performance in terms of the perspectives of multiple stakeholders over time. One way this perspective translates into discounting practice is through moving beyond constant, exponential models toward dynamic approaches that adjust temporal value. In contrast to exponential discounting, hyperbolic discounting features a discount rate that decreases over time, leading to a less steep decline in the value of future benefits. Unlike a linear process, hyperbolic discounting involves a higher rate of discounting in the short term and a lower rate in the long term. This approach reflects time-inconsistent preferences, where individuals disproportionately prefer smaller, immediate rewards over larger, delayed ones - a tendency known as present bias. For example, when offered $100 now or $110 in a month, people often choose the $100. However, when presented with $150 in one year or $160 in 18 months, they are more likely to choose the latter, as the immediate temptation is diminished over longer time horizons. This behavioural economic phenomenon is evident in everyday life, influencing short-term decisions like procrastination or skipping exercise, as well as long-term decisions, such as saving for retirement and has been unpacked by academics including Strotz (1956) 53 and Frederick, Loewenstein & O’Donoghue (2002) 54 .
Exponential vs. Hyperbolic Discounting
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Figure 1: Exponential Discount and Hyperbolic Discount Rates
53 Strotz, R.H., 1956. Myopia and inconsistency in dynamic utility maximization. The Review of Economic Studies, 23(3), pp.165–180. 54 Frederick, S., Loewenstein, G. and O’Donoghue, T., 2002. Time discounting and time preference: A critical review. Journal of Economic Literature, 40(2), pp.351–401.
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