Hyperbolic discounting may be time consistent

Article dans une revue: Using dynamic programming methodology, the paper analyzes the most general conditions for an additive utility functional to represent time consistent preferences. It challenges the conventional wisdom of the domain, which, following Strotz(1956), assume that only exponential discounting is compatible with time consistent behavior. The paper gives some examples of special time consistent hyperbolic discount functions and also discuss the relation between time consistency and stationarity.

Auteur(s)

Nicolas Drouhin

Revue
  • Economics Bulletin
Date de publication
  • 2009
Mots-clés JEL
D14 D9
Mots-clés
  • Intertemporal choice
  • Consumption and saving
  • Time consistency
  • Time discounting
  • Exponential discounting
  • Hyperbolic discounting
Pages
  • 2549-2555
Version
  • 1
Volume
  • 29