Kantian optimization with quasi-hyperbolic discounting

Kirill Borissov, Mikhail Pakhnin and Ron Wendner

MPRA Paper from University Library of Munich, Germany

Abstract: We consider a neoclassical growth model with quasi-hyperbolic discounting under Kantian optimization: each temporal self acts in a way that they would like every future self to act. We introduce the notion of a Kantian policy as an outcome of Kantian optimization in a given class of policies. We derive and characterize a Kantian policy in the class of policies with a constant saving rate for an economy with log-utility and Cobb--Douglas production technology and an economy with isoelastic utility and linear production technology. In all cases, the Kantian saving rate is higher than the saving rate of sophisticated agents, and a Kantian path Pareto dominates a sophisticated path.

Keywords: Quasi-hyperbolic discounting; Time inconsistency; Kantian equilibrium; Sophisticated agents; Saving rate; Welfare (search for similar items in EconPapers)
JEL-codes: C70 D14 D91 E21 O40 (search for similar items in EconPapers)
Date: 2022-06-06
New Economics Papers: this item is included in nep-gro, nep-mac and nep-upt
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Related works:
Working Paper: Kantian Optimization with Quasi-Hyperbolic Discounting (2022)
Working Paper: Kantian optimization with quasi-hyperbolic discounting (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:113300

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