Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171503
Authors: 
Winkler, Ralph
Year of Publication: 
2006
Series/Report no.: 
Economics Working Paper Series 06/60
Abstract: 
In this paper, we extend the well known result that hyperbolically discounting agents tend to postpone costs into the future. In a simple model we show that, without commitment to the ex ante optimal plan, no investment in environmental protection is undertaken over the whole time horizon, no matter whether the decision makers are naive or sophisticated, although investment seems optimal in the long run from every generations point of view. This result questions the application of hyperbolic discounting in cost-benefit analysis and gives rise to concern, as it is consistent with unsatisfactory policy performance in solving long-term environmental problems.
Subjects: 
environmental policy
environmental protection
hyperbolic discounting
intertemporal decision theory
procrastination
time-(in)consistency
JEL: 
Q53
D90
D61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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