Intertemporal choice with different short-term and long-term discount factors
Blavatskyy, P. (2015) Intertemporal choice with different short-term and long-term discount factors. Journal of Mathematical Economics, 61 . pp. 139-143.
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Abstract
This paper proposes a new axiomatic model of intertemporal choice that allows for dynamic inconsistency. We weaken the classical assumption of stationarity into two related axioms: stationarity in the short-term and stationarity in the long-term. We obtain a model with two independent discount factors, which is flexible enough to capture different time preferences, including a greater impatience for more immediate outcomes (when a long-term discount factor exceeds a compounded short-term discount factor). Our proposed model can accommodate some experimental results that cannot be rationalized by other existing models of dynamic inconsistency (such as quasi-hyperbolic discounting and generalized hyperbolic discounting).
Publication Type: | Journal Article |
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Murdoch Affiliation: | School of Management and Governance |
Publisher: | Elsevier |
Copyright: | Elsevier |
URI: | http://researchrepository.murdoch.edu.au/id/eprint/28574 |
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