On multiple discount rates and present bias

Bach Dong Xuan (1) , Philippe Bich (1, 2) , Bertrand Wigniolle (2, 3)

1 CES - Centre d'économie de la Sorbonne
2 PSE - Paris School of Economics
3 PJSE - Paris Jourdan Sciences Economiques

In this paper, we give axiomatic foundations for a social planner objective function that takes the form of the maxmin of quasi-hyperbolic criteria. The minimum is taken over a set Q of possible pairs of discount rates δ and present bias parameters p0. When there is no present bias, we recover Chambers and Echenique’s axiomatization of maxmin exponential preferences, and when Q reduces to a singleton, we get Montiel Olea and Strzalecki’s axiomatization of quasi-hyperbolic preferences. To prove our main result, we provide some intertemporal variational representation results of interest for its own sake.

Mots clés: Discounting; Discount rate; Exponential model; Hyperbolic model; Maxmin expected utility discounting; Maxmin expected utility

Domaines: Economies et finances

Bach Dong Xuan, Philippe Bich, Bertrand Wigniolle. On multiple discount rates and present bias. 2022. ⟨halshs-03884664⟩