A note on the reward-loss duality in time consistent decisions

Nicola Dimitri ()

Department of Economic Policy, Finance and Development (DEPFID) University of Siena from Department of Economic Policy, Finance and Development (DEPFID), University of Siena

Abstract: Individuals choosing among payoffs available at different points in time are considered as rational if they are time consistent. This occurs when their plans of actions are effectively implemented. With time consistent decision makers, the paper points out an interesting dual behavior related to, symmetric, rewards and losses. In a simplest two payoffs context rationality implies opting for a late (earlier), higher (lower), reward and an earlier (delayed), lower (higher) loss. Since rational agents either choose the highest or the lowest available payoff, this raises the question as to whether dynamic rationality has to do with patience or payoff concern.

Keywords: rewards; losses; time consistency. (search for similar items in EconPapers)
JEL-codes: D90 (search for similar items in EconPapers)
Date: 2007-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:usi:depfid:008

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