Testable Implications of Exponential Discounting
We develop a behavioral axiomatic characterization of exponentially discounted utility (EDU) over consumption streams. Given is an individual agent's behavior in the market: assume a finite collection of purchases across periods. We show that such behavior satisfies a "revealed preference axiom" if and only if there exists a EDU model (a discount rate per period and a concave utility function over money) that accounts for the given intertemporal consumption.
Additional InformationNovember 2013. We thank Kim Border and Chris Chambers for inspiration and advice.
Accepted Version - sswp1381.pdf