AbstractThere 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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Bibliographic InfoPaper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 230.
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Date of creation: 2009
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Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
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- D99 - Microeconomics - - Intertemporal Choice and Growth - - - Other
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
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