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Discounting Arduousness

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Author Info
Jesus Marin-Solano
Concepcio Patxot (Universitat de Barcelona)
Abstract

There is a growing literature considering deviations from standard constant discounting. In this paper we combine time-inconsistent (non-constant discounting) preferences with recursive utilities. We apply this setting to the demand side properties of what we call arduous goods. The rational for a non-standard discounting is that production and consumption are not separable in these kinds of goods. The necessary effort implies that individuals discount consumption of these goods in a special way: both biased preferences and dynamic recursive adjustment are present. In this way, willingness to make an effort, modeled as a discount factor, becomes endogenous.

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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 230.

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Length: 0 pages
Date of creation: 2009
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Handle: RePEc:bar:bedcje:2009230

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Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
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Find related papers by JEL classification:
D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
D99 - Microeconomics - - Intertemporal Choice and Growth - - - Other
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis

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  1. Karp, Larry, 2007. "Non-constant discounting in continuous time," Journal of Economic Theory, Elsevier, vol. 132(1), pages 557-568, January. [Downloadable!] (restricted)
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  2. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
  3. Fujii, Tomoki & Karp, Larry, 2008. "Numerical analysis of non-constant pure rate of time preference: A model of climate policy," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 83-101, July. [Downloadable!] (restricted)
  4. Epstein, Larry G, 1987. "The Global Stability of Efficient Intertemporal Allocations," Econometrica, Econometric Society, vol. 55(2), pages 329-55, March. [Downloadable!] (restricted)
  5. Epstein, Larry G., 1983. "Stationary cardinal utility and optimal growth under uncertainty," Journal of Economic Theory, Elsevier, vol. 31(1), pages 133-152, October. [Downloadable!] (restricted)
  6. Hans Fehr & Christian Habermann & Fabian Kindermann, 2006. "Social Security with Rational and Hyperbolic Consumers," Working Papers 010, Bavarian Graduate Program in Economics (BGPE). [Downloadable!]
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  7. Robert J. Barro, 1999. "Ramsey Meets Laibson In The Neoclassical Growth Model," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1125-1152, November. [Downloadable!] (restricted)
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