Discounting Arduousness

Jesus Marin-Solano and Concepció Patxot

No 230, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: There is a growing literature considering deviations from standard constant discounting. In this paper we combine time-inconsistent (non-constant discounting) preferences with recursive utilities. We apply this setting to the demand side properties of what we call arduous goods. The rational for a non-standard discounting is that production and consumption are not separable in these kinds of goods. The necessary effort implies that individuals discount consumption of these goods in a special way: both biased preferences and dynamic recursive adjustment are present. In this way, willingness to make an effort, modeled as a discount factor, becomes endogenous.

JEL-codes: C61 D03 D83 D99 (search for similar items in EconPapers)
Pages: 0 pages
Date: 2009
New Economics Papers: this item is included in nep-ene
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