There is a long tradition in economics about the question of whether intergenerational discounting is fair or not. Ramsey (1928) was the first economist that criticized the discounting and mentioned that the just rate of discounting is zero.  In this paper it was tried to calculate the just rate of discounting for Iran with respect to Islamic thoughts. According to Islam, intergenerational just...

In this entry we characterize pricing kernels or stochastic discount factors that are used to represent valuation operators in dynamic stochastic economies. A kernel is commonlyused mathematical term used to represent an operator. The term stochastic discount factor extends concepts from economics and finance to include adjustments for risk. As we will see, there is a tight connection between t...

Under the S-shaped utility of loss aversion, this paper considers bequest motivation pension plan participants, random salary income before retirement and substitution rate between receiving benefits after wages retirement, studies optimal investment strategy defined contribution (DC) pension. Assuming that funds can invest in a financial market consisting three assets (risk-free asset cash, ro...

When agents can significantly increase other agents’ utility at a moderate cost, the socially optimal outcome is for all agents to repeatedly provide favors to each other whenever they can. However, when agents cannot support or enforce a market system, this forms a situation similar to the repeated prisoner’s dilemma because each agent can unilaterally improve its own utility by refusing to he...

This paper develops and studies a tough love model of intergenerational altruism. We model tough love by modifying the Barro-Becker standard altruism model in two ways. First, the child’s discount factor is endogenously determined, so that low consumption at young age leads to a higher discount factor later in her life. Second, the parent evaluates the child’s lifetime utility with a constant h...

In contrast to the existing literature on repeated games that assumes a Þxed discount factor, I study an environment in which it is more realistic to assume a ßuctuating discount factor. In a repeated oligopoly, as the interest rate changes, so too does the degree to which Þrms discount the future. I characterize the optimal tacit collusion equilibrium when the discount factor changes over time...

Suppose that consumers incur fixed shopping costs and choose stores according to advertised discounts. Then, the extent to which a store will discount advertised items should increase with the profit from other regularly-priced items. Bookstores customarily advertise discounts on bestsellers. Among conventional bookstores, we found that the bestseller discount systematically increased with the ...