Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103117
Authors: 
Buchholz, Wolfgang
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4967
Abstract: 
Under conditions of risk it makes a difference whether the discount rate is determined as an expected present or as an expected future value. This difference which is dubbed as the Weitzman-Gollier puzzle has stimulated an intensive discussion which, however, is somewhat confusing. In this paper we try to provide some clarification by separating the different topics of the debate. In particular we give an intuitive explanation for the divergence between the outcomes of the present and the future value approach. Moreover, we show that a declining time patter of the discount rate which is the major implication of Weitzman's present value approach can also be obtained in many other and more appealing ways.
Subjects: 
cost-benefit analysis
discounting
risk
Weitzman-Gollier Puzzle
JEL: 
D61
D81
D99
G11
Document Type: 
Working Paper

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