Lifetime Uncertainty and Time Preference

Abstract

Despite Fisher's (1930) psychological intuitions of and the formal treatment given by Yaari (1965, Review of Economic Studies 32, 137), the intertemporal model of choice is mainly a model with certain lifetime. The purpose of this paper is to reconsider this assumption, starting from a very simple two-period model of choice with lifetime uncertainty. We examine the comparative statics of the model at the first two orders and replace the concept of `pure time preference' by taking into account the subjective treatment of the probability of survival.

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Correspondence to Nicolas Drouhin.

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Drouhin, N. Lifetime Uncertainty and Time Preference. Theory and Decision 51, 145–172 (2001). https://doi.org/10.1023/A:1015598809123

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  • Intertemporal choice
  • Lifetime uncertainty
  • Rank dependent utility