Intertemporal Choice: A Nash Bargaining Approach

David Baqaee

No DP2010/08, Reserve Bank of New Zealand Discussion Paper Series from Reserve Bank of New Zealand

Abstract: A compelling, but highly tractable, axiomatic foundation for intertemporal decision making is established and discussed. This axiomatic foundation relies on methods employed in cooperative bargaining theory. Four simple axioms imply that the intertemporal objective function is a weighted geometric average of each period's utility function. This is in contrast to standard practice, which takes the objective function to be a weighted arithmetic average. The analysis covers both finite and infinite time.

JEL-codes: C23 D10 R20 (search for similar items in EconPapers)
Pages: 19 p
Date: 2010-08
New Economics Papers: this item is included in nep-gth
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