Long Run Cost Benefit Rules

Antony Millner

No 33291, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I study a preference relation on risky long run public projects induced by a large maturity limit of expected present values. Under common assumptions this relation has a variational representation that is related to a well known model of ambiguity aversion; it is non-probabilistic in general. The formalism generalizes Weitzman’s ‘lowest possible rate’ formula for long run discount rates to a large class of stochastic economies, gives rise to a notion of stochastic dominance adapted to long run valuation, and characterizes features of stochastic processes that cause long run cost benefit rules to be non-probabilistic.

JEL-codes: C73 D81 G12 H43 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-mic, nep-rmg and nep-upt
Note: AP EEE
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