A Theory of (Relative) Discounting
Efe A. Ok and Yusufcan Masatlioglu
,
1
(
137
)
Journal of Economic Theory
214-245
November
2007
Abstract
We derive a representation theorem for time preferences (on the prize-time space) which identifies a novel notion of relative discounting as the key ingredient. This representation covers a variety of time preference models, including the standard exponential and hyperbolic discounting models and certain non-transitive time preferences, such as the similarity-based and subadditive discounting models.