On a Simple Equilibrium with Heterogeneous Quasi-Hyperbolic Discounting Agents

Journal article: This article considers the long-run equilibrium distribution of an economy populated by heterogenous and present biased quasi-hyperbolic discounting agents. In a first configuration with logarithmic utility functions and Cobb-Douglas production technologies, this article establishes the existence and the uniqueness of the equilibrium : only one agent, determined by the highest value of a coefficient building from both the degree of present bias and the rate of discount, will have a positive long-run consumption and a positive long-run wealth. A second configuration with constant elasticities of substitution utilities and linear production technologies is then considered. This article similarly establishes the existence and the uniqueness of the equilibrium. There generically is a unique agent with the highest growth rate for his consumption and his wealth. This agent is determined by both preferences and technology parameters and may change following a technological shock.

Author(s)

Jean-Pierre Drugeon, Bertrand Wigniolle

Journal
  • Revue d’économie politique
Date of publication
  • 2019
Keywords JEL
C62 E32
Keywords
  • Heterogeneities
  • Quasi-hyperbolic discounting
  • Linear decision rules
Pages
  • 715-740
Version
  • 1
Volume
  • 129