An economic model to determine the present value of the past based on three premises: (1) Prior events, somehow aggregated, enter as arguments in the utility function; (2) the process of aggregating prior events can be viewed as mediated through a backward-looking discount rate (decay rate); and (3) the decay rate may be affected by present action. The third premise leads to the corollary that actions taken in the present, which contribute to increases in utility with respect to arguments that have a present or future subscript, may diminish utility with respect to arguments that have a past subscript, and vice versa. Several examples are presented in which the present action is influenced by a desire to protect or preserve a present benefit whose magnitude is often indicated by the scale of prior (i.e., sunk) costs.
Wolf, Charles, Jr., The Present Value of the Past. Santa Monica, CA: RAND Corporation, 1969. https://www.rand.org/pubs/papers/P4067.html. Also available in print form.
Wolf, Charles, Jr., The Present Value of the Past, Santa Monica, Calif.: RAND Corporation, P-4067, 1969. As of September 08, 2021: https://www.rand.org/pubs/papers/P4067.html