Catalog Home Page

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.

[img]
PDF - Authors' Version
Embargoed until 15 September 2018.

Link to Published Version: http://dx.doi.org/10.1016/j.jmateco.2015.08.009
*Subscription may be required

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
Murdoch Affiliation: School of Management and Governance
Publisher: Elsevier
Copyright: Elsevier
URI: http://researchrepository.murdoch.edu.au/id/eprint/28574
Item Control Page Item Control Page