Discounting and Divergence of Opinion

Elyès Jouini (), Jean-Michel Marin () and Clotilde Napp
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Jean-Michel Marin: SELECT - Model selection in statistical learning - LMO - Laboratoire de Mathématiques d'Orsay - UP11 - Université Paris-Sud - Paris 11 - CNRS - Centre National de la Recherche Scientifique - Centre Inria de Saclay - Inria - Institut National de Recherche en Informatique et en Automatique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: The objective of this paper is to adopt a general equilibrium model and determine the socially efficient discount factor, risk free rate and discount rate when there are heterogeneous anticipations about the growth of the economy as well as heterogeneous time preference rates. Among others we tackle the following questions. Is the socially efficient discount factor an arithmetic average of the individual subjectively anticipated discount factors? More generally, can the Arrow-Debreu prices, the risk free rates, the subjectively expected socially efficient discount factors and discount rates be obtained as an average of the individual subjectively anticipated ones? Can beliefs dispersion be analyzed as a sort of additional risk or uncertainty leading to possibly lower discount rates? Is it socially efficient, when diversity of opinion is taken into account, to reduce the discount rate per year for more distant horizons? If so, what is the trajectory of the decline?

Keywords: discount rate; risk free rate (search for similar items in EconPapers)
Date: 2010-03
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00176636v3
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Citations: View citations in EconPapers (34)

Published in Journal of Economic Theory, 2010, 145, pp.830-859

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Journal Article: Discounting and divergence of opinion (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00176636

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