Nominal Wage Contracts as a Commitment against Hyperbolic Discounting

Rhys ap Gwilym

No 10014, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: Economic agents with hyperbolic discount functions display time inconsistent preferences. In this paper, I show that for such agents fixed nominal wage contracts may represent a welfare enhancing commitment mechanism.

Keywords: Nominal rigidities; Hyperbolic discounting (search for similar items in EconPapers)
Pages: 12 pages
Date: 2010-12
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