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Uncertain discount and hyperbolic preferences

Daniele Pennesi ()

No 2015-02, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: When the discount rate is uncertain, individuals whose preferences are consistent with discounted expected utility, exhibit diminishing impatience. This paper introduces and characterizes a variation of discounted expected utility in which the discount rate depends on the state of the nature that will occur. Quasi-hyperbolic discounting and the model of Dasgupta and Maskin (2005) are particular cases. The present bias disappears when the immediate payoff becomes uncertain. Commitment may be detrimental unless the discount rate is constant.

Keywords: Diminishing Impatience; Uncertainty; Hyperbolic Discounting; Time Inconsistency (search for similar items in EconPapers)
JEL-codes: D03 D81 D90 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Uncertain discount and hyperbolic preferences (2017) Downloads
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