On Time Discounting, Impatience and Risk Aversion

Location: 
Elath Hall, 2nd floor, Feldman Building, Edmond J. Safra Campus
Dates: 
Sunday, December 24, 2017 - 16:00
Lecturers: 
Yonatan Aumann
Bar - Ilan University
Abstract: 

Time discounting is a ubiquitous assumption in economic literature.  We (re)explore the foundations of such time preferences. "Impatience" is defined as a preferences for experiencing the better states sooner rather than later, even when there is no uncertainty associated with the future. We show that, assuming consistency and some weak stationarity assumptions, impatience is incompatible with a meaningful notion of a risk-attitude (risk aversion/love/neutrality).On the other hand, if there is uncertainty associated with the future then discounting necessarily emerges. We explore the structure of such discounted preferences, and, in particular, the association between risk aversion and discounting. This, in turn, establishes connections between the decision maker's quality of life - past, present and (expected) future - and her discounting pattern.