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American Economic Review Vol. 101 No. 5 2011

Strotz Meets Allais: Diminishing Impatience and the Certainty Effect: Comment

Kota Saito

Department of Economics, Northwestern University, Evanston, IL 60208.

Abstract

Halevy (2008) states the equivalence between diminishing impatience (i.e., quasi–hyperbolic discounting) and the common ratio effect. The present paper shows that one way of the equivalence is false and shows the correct and general relationships: diminishing impatience is equivalent to the certainty effect and that strong diminishing impatience (i.e., hyperbolic discounting) is equivalent to the common ratio effect. JEL: D81

DOI
10.1257/aer.101.5.2271
Volume
101
Issue
5
Pages
2271-2275
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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