Diminishing Impatience: Disentangling Time Preference from Uncertain Lifetime
A decision maker with time consistent preferences may exhibit diminishing impatience, when uncertain lifetime is accounted for. Uncertain lifetime captures not only the risk of mortality, but also the possibility that a promise for a delayed reward might be breached, or a postponed consumption might not be realized. The restrictions that time consistency imposes on additive intertemporal preferences are characterized. It is shown that if the hazard rate of mortality is diminishing, then a time consistent agent will exhibit diminishing impatience. A demographic model that allows for unobservable heterogeneity in frailty (risk of mortality) accommodates diminishing impatience, even in the presence of stationarity and time consistency.
(This abstract was borrowed from another version of this item.)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Smith, Lones, 1997.
"Time-consistent optimal stopping,"
Elsevier, vol. 56(3), pages 277-279, November.
- Jesus Fernandez-Villaverde & Arijit Mukherji, 2002.
"Can We Really Observe Hyperbolic Discounting?,"
NajEcon Working Paper Reviews
- Jesus Fernandez-Villaverde & Arijit Mukherji, 2003. "Can We Really Observe Hyperbolic Discounting," Levine's Working Paper Archive 618897000000000779, David K. Levine.
- Jesus Fernandez-Villaverde & Arijit Mukherji, 2002. "Can We Really Observe Hyperbolic Discounting?," Levine's Working Paper Archive 391749000000000478, David K. Levine.
- James Vaupel, 1988. "Inherited frailty and longevity," Demography, Springer, vol. 25(2), pages 277-287, May.
- Burness, H Stuart, 1976. "A Note on Consistent Naive Intertemporal Decision Making and an Application to the Case of Uncertain Lifetime," Review of Economic Studies, Wiley Blackwell, vol. 43(3), pages 547-49, October.
- Ted O'Donoghue & Matthew Rabin, 1996.
"Doing It Now or Later,"
1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
- Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
- Itzhak Gilboa & David Schmeidler, 1992.
"Case-Based Decision Theory,"
994, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Read, Daniel, 2001. " Is Time-Discounting Hyperbolic or Subadditive?," Journal of Risk and Uncertainty, Springer, vol. 23(1), pages 5-32, July.
- Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
- Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
- Hamermesh, Daniel S, 1985.
"Expectations, Life Expectancy, and Economic Behavior,"
The Quarterly Journal of Economics,
MIT Press, vol. 100(2), pages 389-408, May.
- Daniel S. Hamermesh, 1982. "Expectations, Life Expectancy, and Economic Behavior," NBER Working Papers 0835, National Bureau of Economic Research, Inc.
- Michael D. Hurd & Daniel McFadden & Angela Merrill, 2001.
"Predictors of Mortality among the Elderly,"
in: Themes in the Economics of Aging, pages 171-198
National Bureau of Economic Research, Inc.
- Laibson, David, 1997.
"Golden Eggs and Hyperbolic Discounting,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(2), pages 443-77, May.
- Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
- Smith, V. Kerry & Taylor, Donald H., Jr. & Sloan, Frank A., 2000.
"Longevity Expectations and Death: Can People Predict Their Own Demise?,"
00-15, Duke University, Department of Economics.
- V. Kerry Smith & Donald H. Taylor & Frank A. Sloan, 2001. "Longevity Expectations and Death: Can People Predict Their Own Demise?," American Economic Review, American Economic Association, vol. 91(4), pages 1126-1134, September.
- Stephen W. Salant, 1974.
"Search theory and duration data: a theory of sorts,"
Special Studies Papers
42, Board of Governors of the Federal Reserve System (U.S.).
- Salant, Stephen W, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 39-57, February.
- Azfar, Omar, 1999. "Rationalizing hyperbolic discounting," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 245-252, February.
- Martin L. Weitzman, 1998.
Harvard Institute of Economic Research Working Papers
1843, Harvard - Institute of Economic Research.
- Michael D. Hurd & Kathleen McGarry, 2002.
"The Predictive Validity of Subjective Probabilities of Survival,"
Royal Economic Society, vol. 112(482), pages 966-985, October.
- Michael D. Hurd & Kathleen McGarry, 1997. "The Predictive Validity of Subjective Probabilities of Survival," NBER Working Papers 6193, National Bureau of Economic Research, Inc.
- Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
- James Vaupel & Kenneth Manton & Eric Stallard, 1979. "The impact of heterogeneity in individual frailty on the dynamics of mortality," Demography, Springer, vol. 16(3), pages 439-454, August.
- Efe A Ok & Yusufcan Masatlioglu, 2003. "A General Theory of Time Preferences," Levine's Bibliography 234936000000000089, UCLA Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:cla:levrem:122247000000000185. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine)
If references are entirely missing, you can add them using this form.