Lifetime Uncertainty and Time Preference |
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Authors: | Drouhin Nicolas |
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Affiliation: | (1) Ecole Normale Superieure de Cachan, 61 avenue du President Wilson, F-94 235 Caclan, France |
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Abstract: | Despite Fisher's (1930) psychological intuitions of and the formal treatment given by Yaari (1965, Review of Economic Studies 32, 137), the intertemporal model of choice is mainly a model with certain lifetime. The purpose of this paper is to reconsider this assumption, starting from a very simple two-period model of choice with lifetime uncertainty. We examine the comparative statics of the model at the first two orders and replace the concept of `pure time preference' by taking into account the subjective treatment of the probability of survival. This revised version was published online in June 2006 with corrections to the Cover Date. |
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Keywords: | Intertemporal choice Lifetime uncertainty Rank dependent utility |
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