How to Cut the Knot of Discount Rates

One way to cut this knot of discount rates might be just to focus on beliefs of economic participants. For example, recent home buyers in Los Angeles thought that their house prices would increase about 14% on average per year for the next 10 years. Most of them thought there was no risk in buying a home at that time. So you could look at over optimistic, extrapolative beliefs and then look at the changes in those beliefs using survey evidence.