2000 character limit reached
On the time consistency of collective preferences (1607.02688v3)
Published 10 Jul 2016 in math.OC and q-fin.EC
Abstract: A dynamic model of collective consumption and saving decisions made by a finite number of agents with constant but different discount rates is developed. Collective utility is a weighted sum of individual utilities with time-varying utility weights. Under standard separability assumptions, it is shown that collective preferences may be nonstationary but still satisfy time consistency. The assumption of time-varying weights is key to balance the need of the group for a changing distribution of consumption among its members over time with their tolerance for consumption fluctuations.
Paper Prompts
Sign up for free to create and run prompts on this paper using GPT-5.
Collections
Sign up for free to add this paper to one or more collections.