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A Not so Myopic Axiomatization of Discounting

Jean-Pierre Drugeon and Thai Ha-Huy ()
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Thai Ha-Huy: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne

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Abstract: This article builds an axiomatization of inter-temporal trade-offs that makes an explicit account of the distant future and therefore encompasses motives related to sustainability, transmission to offsprings 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: Discount; Temporal Order Decompositions; Infinite Dimensional Topologies; Axiomatization; Myopia (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-evo, nep-mic and nep-upt
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Working Paper: A not so myopic axiomatization of discounting (2018) Downloads
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