Infinite-Horizon Choice Functions

Geir B. Asheim (), Walter Bossert () and Yves SPRUMONT

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: We analyze infinite-horizon choice functions within the setting of a simple linear technology. Time consistency and efficiency are characterized by stationary consumption and inheritance functions, as well as a transversality condition. In addition, we consider the equity axioms Suppes-Sen, Pigou-Dalton, and resource monotonicity. We show that Suppes-Sen and Pigou-Dalton imply that the consumption and inheritance functions are monotone with respect to time—thus justifying sustainability—while resource monotonicity implies that the consumption and inheritance functions are monotone with respect to the resource. Examples illustrate the characterization results.

Keywords: Intergenerational resource allocation; infinite-horizon choice (search for similar items in EconPapers)
JEL-codes: D63 D71 (search for similar items in EconPapers)
Date: Written 2006
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http://hdl.handle.net/1866/2145 (application/pdf)

Related works:
Working Paper: Infinite-horizon choice functions (2006)
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