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Planning for the Long Run: Programming with Patient, Pareto Responsive Preferences

Author

Listed:
  • Urmee Khan

    (Department of Economics, University of California Riverside)

  • Maxwell B Stinchcombe

    (UT, Austin)

Abstract

Ethical social welfare functions treat generations equally and respect Pareto improvements to non-null sets of generations. There are ‘perfect’ optima for such preferences: generations facing the same circumstances choose the same actions; and all circumstances are treated as possible. If each stationary policy determines a unique long-run distribution that is independent of the starting point, then there is a recursive formulation of policies that are simultaneously optimal for all of the preferences studied here. When the ergodic distribution can depend on early events (hysteresis), the curvature of the social welfare function determines the risks that society is willing to undertake and leads to a variant of the precautionary principle.

Suggested Citation

  • Urmee Khan & Maxwell B Stinchcombe, 2016. "Planning for the Long Run: Programming with Patient, Pareto Responsive Preferences," Working Papers 201608, University of California at Riverside, Department of Economics.
    • Handle: RePEc:ucr:wpaper:201608
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    References listed on IDEAS

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    Keywords

    Intergenerational equity and Pareto responsiveness; long-run optimality in Markovian decision problems;

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