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Published May 2020 | public
Journal Article

The Pareto Comparisons of a Group of Exponential Discounters


Agents with different discount factors disagree about some intertemporal trade-offs, but they will also agree sometimes. We seek to understand precisely the nature of their agreements and disagreements. A group of agents is identified with a set of discount factors. We characterize the comparisons that a given interval of discount factors will agree on, including what all discount factors in the interval [0, 1] will agree on. Our result is analogous to how all risk-averse and monotone agents agree on mean-preserving spreads. Motivated by a maxmin representation, we also characterize the comparisons that are consistent with some set of discount factors, when the set is not known or exogenously given. In other words, we describe the Pareto comparisons that are consistent with a society, or group, of exponentially discounting agents.

Additional Information

© 2020 INFORMS. Received: December 22, 2017; Accepted: March 04, 2019; Published Online: January 31, 2020. The authors thank Luke Boosey, Simone Cerreia-Vioglio, Vijay Krishna, Efe Ok, Phil Reny, Itai Sher, Tomasz Strzalecki; and participants of numerous seminars and conferences where they have presented the paper, for comments; and two anonymous referees and especially an associate editor who suggested new results. Most of the results in this paper appeared first in the working paper version of "On multiple discount rates" (see Caltech SSWP 1418; first posted May 2016). This work was supported by the National Science Foundation (NSF) Directorate for Computer and Information Science and Engineering [CNS-1518941] and the NSF Division of Social and Economic Sciences [SES-1558757], both to F. Echenique.

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