We consider a broad class of intertemporal economic problems and characterize the short-run long-run responses demand for good to permanent increase in its market price. Depending on interplay between self-productivity time discounting, we show that dynamic substitution effects can generate price elasticities opposite signs short run long run. (JEL D11, D15, H20, J22, J24)

Time preference has a peculiar role in determining the level of economic activities. Time preferenceis the most important origin of interest rate. In this paper we study the founders and defenders'viewpoints about time preference and then we try to criticize them. It seems that discounting futureutilities is resulting from irrationality and it is ethically indefensible too. From mathematical as...

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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 ...

Following Kreps (1979), we consider a decision maker who is uncertain about her future taste for immediate consumption. This uncertainty leaves the decision maker with a preference for flexibility: When choosing among menus containing alternatives for future choice, she weakly prefers menus with additional alternatives. Existing representations accommodating this choice pattern cannot address d...

We infer the thoughts and feelings of others by taking their perspectives. Similar processes could be used to understand how we will be affected by future events, by allowing us to take the perspective of our future self. In this paper, we test this idea using a previously presented framework for guiding predictions. The framework proposes that a shared neural mechanism is involved in controlli...

Recent financial studies often assume agents have Epstein and Zin (1989) preferences, preferences which require agents to care about when uncertainty is resolved. Under this “recursive-preference” framework, the preference for uncertainty resolution is entirely determined by an agent’s preferences for risk and intertemporal substitution. To test the implications of this model, this paper presen...

When making intertemporal decisions, i.e., decisions between outcomes occurring at different instants in time, humans and animals prefer rewards with short-term availability over rewards that become available in the long run. Discounted utility theory (DUT) is an influential normative model for intertemporal decisions that attempts to capture preference over time. It prescribes which is the bes...