Stochastic endogenous time preference

Youichiro Higashi, Kazuya Hyogo () and Norio Takeoka

Journal of Mathematical Economics, 2014, vol. 51, issue C, 77-92

Abstract: Preference for flexibility arises inherently in sequential decision making. However, a majority of the literature has limitations to capture a changing preference for flexibility across time in the sense that such an attitude is independent of past actions. This study incorporates the histories of past actions into an infinite-horizon extension of Dekel et al. (2001) and models a decision maker whose attitude toward flexibility evolves over time from the uncertainty of future time preference or discount factors. Moreover, we provide behavioral comparisons of the degree of patience across different histories and characterize the shift of subjective beliefs about discount factors in the sense of an increasing convex and concave stochastic order.

Keywords: Preference for flexibility; Subjective states; Endogenous time preference; Comparative impatience; Increasing convex [concave] stochastic order (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:51:y:2014:i:c:p:77-92

DOI: 10.1016/j.jmateco.2014.01.011

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