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Temporal dominance and relative patience in intertemporal choice

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  • Pavlo Blavatskyy

    (Montpellier Business School)

Abstract

A stream of intertemporal payoffs X first-order (second-order) temporarily dominates another stream Y if (the area below) the cumulative payoff function of X up till any moment of time is always at least as high as that of Y; or, equivalently, any rank-dependent discounted utility maximizer with a strictly increasing (concave) utility function and a strictly decreasing (convex) discount function prefers X over Y. An individual A is relatively more patient than an individual B if, whenever B is willing to undertake some investment project, A is moreover so; or, equivalently, for any stream of payoffs, A’s present-day equivalent is at least as high as that of B; or, equivalently, A’s discount factor is at least as high as that of B and B’s utility function is “more concave” than that of A. Related concepts of absolute patience and comparative probabilistic patience are briefly discussed.

Suggested Citation

  • Pavlo Blavatskyy, 2018. "Temporal dominance and relative patience in intertemporal choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 361-384, March.
    • Handle: RePEc:spr:joecth:v:65:y:2018:i:2:d:10.1007_s00199-016-1020-1
    DOI: 10.1007/s00199-016-1020-1
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    References listed on IDEAS

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    1. Pavlo R. Blavatskyy & Hela Maafi, 2018. "Estimating representations of time preferences and models of probabilistic intertemporal choice on experimental data," Journal of Risk and Uncertainty, Springer, vol. 56(3), pages 259-287, June.
    2. Blavatskyy, Pavlo, 2019. "Future plans and errors," Mathematical Social Sciences, Elsevier, vol. 102(C), pages 85-92.
    3. Pavlo R. Blavatskyy, 2022. "Intertemporal choice as a tradeoff between cumulative payoff and average delay," Journal of Risk and Uncertainty, Springer, vol. 64(1), pages 89-107, February.
    4. Pavlo Blavatskyy, 2020. "Expected discounted utility," Theory and Decision, Springer, vol. 88(2), pages 297-313, March.
    5. Pavlo R. Blavatskyy & Hela Maafi, 2020. "A new test of convexity–concavity of discount function," Theory and Decision, Springer, vol. 89(2), pages 121-136, September.

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    More about this item

    Keywords

    Intertemporal choice; Time preference; Discounted utility; Temporal dominance; Relative patience; Dynamic inconsistency; Hyperbolic discounting;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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