Diminishing Impatience: Disentangling Time Preference from Uncertain Lifetime

Yoram Halevy

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: A decision maker with time consistent preferences may exhibit diminishing impatience, when uncertain lifetime is accounted for. Uncertain lifetime captures not only the risk of mortality, but also the possibility that a promise for a delayed reward might be breached, or a postponed consumption might not be realized. The restrictions that time consistency imposes on additive intertemporal preferences are characterized. It is shown that if the hazard rate of mortality is diminishing, then a time consistent agent will exhibit diminishing impatience. A demographic model that allows for unobservable heterogeneity in frailty (risk of mortality) accommodates diminishing impatience, even in the presence of stationarity and time consistency.

Keywords: Intertemporal substitution; time consistency; uncertain lifetime; exponential discounting; hyperbolic discounting; frailty; duration models; expectanc (search for similar items in EconPapers)
JEL-codes: D81 D91 J10 J64 (search for similar items in EconPapers)
Pages: 0 pages
Date: 2004-10-29, Revised 2014-02-25
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (2)

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Working Paper: Diminishing Impatience: Disentangling Time Preference from Uncertain Lifetime (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ubc:pmicro:halevy-04-10-29-09-59-47

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