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Random intertemporal choice

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  • Lu, Jay
  • Saito, Kota

Abstract

We provide a theory of random intertemporal choice. Agents exhibit stochastic choice over consumption due to preference shocks to discounting attitudes. We first demonstrate how the distribution of these preference shocks can be uniquely identified from random choice data. We then provide axiomatic characterizations of some common random discounting models, including exponential and quasi-hyperbolic discounting. In particular, we show how testing for exponential discounting under stochastic choice involves checking for both a stochastic version of stationarity and a novel axiom characterizing decreasing impatience.

Suggested Citation

  • Lu, Jay & Saito, Kota, 2018. "Random intertemporal choice," Journal of Economic Theory, Elsevier, vol. 177(C), pages 780-815.
    • Handle: RePEc:eee:jetheo:v:177:y:2018:i:c:p:780-815
    DOI: 10.1016/j.jet.2018.08.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Haoge Chang & Yusuke Narita & Kota Saito, 2022. "Approximating Choice Data by Discrete Choice Models," Papers 2205.01882, arXiv.org, revised Dec 2023.
    2. Chambers, Christopher P. & Masatlioglu, Yusufcan & Turansick, Christopher, 2024. "Correlated choice," Theoretical Economics, Econometric Society, vol. 19(3), July.
      • Christopher P. Chambers & Yusufcan Masatlioglu & Christopher Turansick, 2021. "Correlated Choice," Papers 2103.05084, arXiv.org, revised Mar 2023.
    3. Benjamin Enke & Thomas Graeber & Ryan Oprea & Thomas W. Graeber, 2023. "Complexity and Hyperbolic Discounting," CESifo Working Paper Series 10861, CESifo.
    4. Benjamin Enke & Thomas W. Graeber, 2021. "Cognitive Uncertainty in Intertemporal Choice," CESifo Working Paper Series 9472, CESifo.
    5. Li, Boyao, 2023. "Random utility models with status quo bias," Journal of Mathematical Economics, Elsevier, vol. 105(C).
    6. Benjamin Enke & Thomas Graeber & Ryan Oprea, 2023. "Complexity and Time," CESifo Working Paper Series 10327, CESifo.
    7. Pennesi, Daniele, 2021. "Intertemporal discrete choice," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 690-706.

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    More about this item

    Keywords

    Stochastic choice; Intertemporal choice; Discounting; Stationarity;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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