Arbeitspapier

Intertemporal efficiency and equity under hyperbolic preferences: Ex ante versus ex post procrastination

In this paper I extend the well known result that a hyperbolically discounting agent postpones costs into the future. If society has hyperbolic inter-temporal preferences, it may be optimal from an ex ante point of view to postpone structural change from a polluting to a non polluting production sector into the future (ex ante procrastination). The consequences of ex ante procrastination are discussed for three different behavioral patterns. I show that, depending on the assumed behavioral regime, ex ante procrastination may lead to ex post procrastination, i.e. de facto no investment in the non polluting sector is undertaken over the whole time horizon, although investment was optimal from an ex ante point of view. Furthermore, the ex post implemented investment plan may be inefficient if it is not dictatorial. Hence, in the case of hyperbolic preferences there is a potential trade-off between inter-temporal efficiency and equity.

Sprache
Englisch

Erschienen in
Series: Discussion Paper Series ; No. 402

Klassifikation
Wirtschaft
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Renewable Resources and Conservation: Water
Optimization Techniques; Programming Models; Dynamic Analysis
Thema
dynamic optimization
emission abatement
hyperbolic preferences
intergenerational equity
inter temporal decision theory
procrastination
Umweltschutzinvestition
Intertemporale Entscheidung
Intertemporale Allokation
Theorie

Ereignis
Geistige Schöpfung
(wer)
Winkler, Ralph
Ereignis
Veröffentlichung
(wer)
University of Heidelberg, Department of Economics
(wo)
Heidelberg
(wann)
2004

Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Winkler, Ralph
  • University of Heidelberg, Department of Economics

Entstanden

  • 2004

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