Random intertemporal choice

Random Intertemporal Choice

We provide a theory of random intertemporal choice. Choice is random due to unobserved heterogeneity in discounting from the perspective of a modeler. First, we show that the modeler can identify the distribution of discount rates uniquely from random choice. We then provide axiomatic characterizations of random discounting utility models, including exponential and quasi-hyperbolic discounting ...

Subjective random discounting and intertemporal choice

This paper provides an axiomatic foundation for a particular type of preference shock model, called the random discounting representation, where a decision maker believes that her discount factors change randomly over time. For this purpose, we formulate an infinite horizon extension of Dekel, Lipman, and Rustichini (2001), and identify the behavior that reduces all the subjective uncertainties...

Intertemporal Choice

Intertemporal Choice and Inequality

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Intangibility in intertemporal choice.

Since the advent of the discounted utility (DU) model, economists have thought about intertemporal choice in very specific terms. DU assumes that people make explicit trade-offs between costs and benefits occurring at different points in time. While this explicit trade-off perspective is simple and tractable, and has stimulated productive research, it does not provide a very realistic represent...