Collective Dynamic Choice: The Necessity of Time Inconsistency
We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, every Pareto efficient and non-dictatorial method of aggregating utility functions must be time-inconsistent. We also show that decisions made via non-dictatorial voting methods are intransitive.
© 2015 American Economic Association. We thank Nageeb Ali, Sandro Ambuehl, James Andreoni, Kenneth Arrow, Mariagiovanna Baccara, Miguel Angel Ballester, Douglas Bernheim, Martin Browning, Christopher Chambers, Jeff Ely, Keith Ericson, Drew Fudenberg, Jerry Green, Olivier l'Haridon, Andrew Hertzberg, Julian Jamison, Lauren Merrill, Jochen Mierau, Massimo Morelli, Efe Ok, Antonio Rangel, Ariel Rubinstein, Erik Snowberg, and Tomasz Strzalecki for useful discussions and suggestions, as well as two anonymous referees for helpful comments. We gratefully acknowledge financial support from the National Science Foundation (SES 0551014 and SES 0961481) and the Gordon and Betty Moore Foundation (Grant 1158).
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