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A not so myopic axiomatization of discounting

Jean-Pierre Drugeon and Thai Ha-Huy ()

No 18-02, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: This article builds an axiomatization of inter-temporal trade-o)s that makes an explicit account of the distant future and therefore encompasses motives related to sustainability, transmission to o)springs and altruism. The focus is on separable representations and the approach is completed following a decision-theory index based approach that is applied to utility streams. This enlightens the limits of the commonly used tail intensity requesites for the evaluation of utility streams: in this article, these are supersed and replaced by an axiomatic approach to optimal myopia degrees that in its turn precedes the determination of optimal discount. The overall approach is anchored in the new and explicit proof of a temporal decomposition of the preference orders between the distant future and the close future itself directly related to the determination of the optimal myopia degrees. The argument is shown to provide a novel understanding of temporal biases with the scope for a distant future bias when the finite dimensional gets influenced by the infinite dimensional. The reference to robust orders and pessimism-like axioms finally allows for determining tractable representations for the indexes.

Keywords: Axiomatization; Myopia; Discount; Temporal Order Decompositions; Infinite Dimensional Topologies (search for similar items in EconPapers)
JEL-codes: D11 D15 D90 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2018
New Economics Papers: this item is included in nep-upt
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Working Paper: A Not so Myopic Axiomatization of Discounting (2018) Downloads
Working Paper: A Not so Myopic Axiomatization of Discounting (2018) Downloads
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