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Exotic Preferences for Macroeconomists

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  • David Backus
  • Bryan Routledge
  • Stanley Zin

Abstract

We provide a user's guide to exotic' preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk-sensitive and robust control, hyperbolic' discounting, and preferences over sets ( temptations'). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allocations.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10597.

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Date of creation: Jun 2004
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Publication status: published as Exotic Preferences for Macroeconomists , David K. Backus, Bryan R. Routledge, Stanley E. Zin. in NBER Macroeconomics Annual 2004, Volume 19 , Gertler and Rogoff. 2005
Handle: RePEc:nbr:nberwo:10597

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