Arbeitspapier

Collective Investment Decision Making with Heterogeneous Time Preferences

We examine the investment decision problem of a group whose members have heterogeneous time preferences. In particular, they have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of shadow prices that would decentralize such allocations. We show in particular that the term structure of interest rates is decreasing when all members have DARA preferences. Heterogeneous groups should not use exponential discounting for their collective investment decisions even if all agents discount exponentially.We also exhibit conditions that lead the representative agent to have a rate of impatience that decreases with GDP per capita.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 915

Classification
Wirtschaft
Analysis of Collective Decision-Making: General
Subject
aggregation of preferences
hyperbolic discounting
impatience
time preference
investment and consumption

Event
Geistige Schöpfung
(who)
Gollier, Christian
Zeckhauser, Richard
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2003

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Gollier, Christian
  • Zeckhauser, Richard
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2003

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