Interpersonal Allocation Continuous with Intertemporal Allocation

Julian L. Simon
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Julian L. Simon: University of Maryland

Rationality and Society, 1995, vol. 7, issue 4, 367-392

Abstract: Gifts and bequests trouble economic theory. A solution is to deal similarly with distributions for consumption among (a) the current person, (b)future self-persons who are legally and physically the same individual who is allocating, and (c) other individuals at present and in the future. Instead of a one-dimensional maximizing entity, or even the two-dimensional individual who allocates intertemporally, this model envisages a three-dimensional surface, with an interpersonal "distance" dimension replacing the concept of altruism. A key assumption, as in Strotzian intertemporal allocations, is that the discount between the current conscious "person" and future "self-persons" within the same individual is greater than the discount between other equal-length forward periods within the same individual. Applying a conventional present-value framework to evaluate utility, as seen at various decision-making moments, then makes sense of the phenomena under discussion.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ratsoc:v:7:y:1995:i:4:p:367-392

DOI: 10.1177/104346319500700402

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