Collective Investment Decision Making with Heterogeneous Time Preferences

Christian Gollier () and Richard Zeckhauser ()

No 9629, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the investment decision problem of a group whose members have heterogeneous time preferences. In particular, they have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of shadow prices that would decentralize such allocations. We show in particular that the term structure of interest rates is decreasing when all members have DARA preferences. Heterogeneous groups should not use exponential discounting for their collective investment decisions even if all agents discount exponentially. We also exhibit conditions that lead the representative agent to have a rate of impatience that decreases with GDP per capita.

JEL-codes: H43 E43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-mac
Date: 2003-04
Note: EFG
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Related works:
Working Paper: Collective Investment Decision Making with Heterogeneous Time Preferences (2003)
Working Paper: Collective Investment Decision Making with Heterogeneous Time Preferences (2003)
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