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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Drouhin, N. Lifetime Uncertainty and Time Preference. Theory and Decision 51, 145–172 (2001). https://doi.org/10.1023/A:1015598809123
- Intertemporal choice
- Lifetime uncertainty
- Rank dependent utility