Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94931
Authors: 
Sáez-Martí, María
Weibull, Jörgen W.
Year of Publication: 
2002
Series/Report no.: 
IUI Working Paper 575
Abstract: 
Is discounting of future instantaneous utilities consistent with altruism towards future selves? More precisely, can temporal preferences, expressed as a sum of discounted instantaneous utilities, be derived from a representation in the form of a sum of discounted total utilities? We find that a representation in the quasi-exponential (ß,d)-form in Phelps and Pollak (1968) and Laibson (1997) correspond to quasi-exponential altruism towards one's future selves. For ß=1/2, these welfare weights are exponential, while for ß<1/2 they are biased in favor of the current self, and for ß>1/2 in favor of one's future selves. More generally, we establish a functional equation which relates welfare weights to instantaneous-utility weights and apply this equation to a number of examples. We also postulate five desiderata for instantaneous-utility discounting. None of the usual discount functions satisfy all desiderata, but we propose a simple class of discount functions which does.
Subjects: 
Altruism
Discounting
Dynamic Inconsistency
Welfare
JEL: 
D11
D64
D91
E21
Document Type: 
Working Paper

Files in This Item:
File
Size
568.02 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.