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RINCE Preferences

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  • Roger E. A. Farmer

Abstract

This paper presents a class of preferences that yield closed-form solutions to dynamic stochastic choice problems. These preferences are based on a set of axioms that were proposed by Kreps and Porteus. The Kreps-Porteus axioms allow one to separate an agent's attitudes to risk from his or her intertemporal elasticity of substitution. RINCE preferences have the properties of Risk Neutrality and Constant Elasticity of substitution.

Suggested Citation

  • Roger E. A. Farmer, 1990. "RINCE Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(1), pages 43-60.
    • Handle: RePEc:oup:qjecon:v:105:y:1990:i:1:p:43-60.
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    References listed on IDEAS

    as
    1. Chew, Soo Hong & Epstein, Larry G., 1990. "Nonexpected utility preferences in a temporal framework with an application to consumption-savings behaviour," Journal of Economic Theory, Elsevier, vol. 50(1), pages 54-81, February.
    2. Attanasio, Orazio P & Weber, Guglielmo, 1989. "Intertemporal Substitution, Risk Aversion and the Euler Equation for Consumption," Economic Journal, Royal Economic Society, vol. 99(395), pages 59-73, Supplemen.
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