Stochastic endogenous time preference

Youichirou Higashi, Kazuya Hyogo, Norio Takeoka

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Preference for flexibility arises inherently in sequential decision making. However, a majority of the literature has limitations to capture a changing preference for flexibility across time in the sense that such an attitude is independent of past actions. This study incorporates the histories of past actions into an infinite-horizon extension of Dekel etal. (2001) and models a decision maker whose attitude toward flexibility evolves over time from the uncertainty of future time preference or discount factors. Moreover, we provide behavioral comparisons of the degree of patience across different histories and characterize the shift of subjective beliefs about discount factors in the sense of an increasing convex and concave stochastic order.

Original languageEnglish
Pages (from-to)77-92
Number of pages16
JournalJournal of Mathematical Economics
Volume51
Issue number1
DOIs
Publication statusPublished - 2014

Fingerprint

Discount Factor
Decision making
Flexibility
Stochastic Order
Infinite Horizon
Decision Making
Uncertainty
Discount factor
Preference for flexibility
Endogenous time preference
History
Model
Decision maker
Time preference
Stochastic order
Sequential decision making
Infinite horizon
Beliefs

Keywords

  • Comparative impatience
  • Endogenous time preference
  • Increasing convex [concave] stochastic order
  • Preference for flexibility
  • Subjective states

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

Cite this

Stochastic endogenous time preference. / Higashi, Youichirou; Hyogo, Kazuya; Takeoka, Norio.

In: Journal of Mathematical Economics, Vol. 51, No. 1, 2014, p. 77-92.

Research output: Contribution to journalArticle

Higashi, Youichirou ; Hyogo, Kazuya ; Takeoka, Norio. / Stochastic endogenous time preference. In: Journal of Mathematical Economics. 2014 ; Vol. 51, No. 1. pp. 77-92.
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