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Observational Implications of Non-Exponential Discounting

Author

Listed:
  • Stephen Morris
  • Andrew Postlewaite

Abstract

In this note we provide an elementary example with a concave utility function where the essentially unique consistent savings rule is discontinuous; such a savings rule could not arise with exponential discounting. JEL Codes: D01.

Suggested Citation

  • Stephen Morris & Andrew Postlewaite, 2020. "Observational Implications of Non-Exponential Discounting," Revue économique, Presses de Sciences-Po, vol. 71(2), pages 313-321.
    • Handle: RePEc:cai:recosp:reco_712_0313
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    Citations

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    Cited by:

    1. Christopher Harris & David Laibson, 2013. "Instantaneous Gratification," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 205-248.
    2. Liutang Gong & William Smith & Heng-fu Zou, 2007. "Asset Prices and Hyperbolic Discounting," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 397-414, November.
    3. David K. Backus & Bryan R. Routledge & Stanley E. Zin, 2005. "Exotic Preferences for Macroeconomists," NBER Chapters, in: NBER Macroeconomics Annual 2004, Volume 19, pages 319-414, National Bureau of Economic Research, Inc.
    4. Toda, Alexis Akira, 2021. "Necessity of hyperbolic absolute risk aversion for the concavity of consumption functions," Journal of Mathematical Economics, Elsevier, vol. 94(C).

    More about this item

    Keywords

    decision theory; dynamic consistency;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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