Econometrica Vol. 90 No. 2 2022
Optimal Discounting
open access
Abstract
The agent is modeled as a current self that optimally incurs a cognitive cost of empathizing with future selves. The model unifies well‐known experimental and empirical findings in intertemporal choice and enriches the multiple selves model with a notion of self‐control. The defining feature of the model is magnitude‐decreasing impatience: greater patience toward larger rewards. Two behavioral definitions of magnitude‐decreasing impatience are provided and the model is characterized under each of them.
- DOI
- 10.3982/ecta16050
- Volume
- 90
- Issue
- 2
- Pages
- 585-623
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref