An equilibrium approach for Gamma Discounting
Jouini, Elyès; Napp, Clotilde (2009-02), An equilibrium approach for Gamma Discounting, European Economic Association & Econometric Society, 2009-08, Barcelone, Espagne
TypeCommunication / Conférence
Conference titleEuropean Economic Association & Econometric Society
MetadataShow full item record
Abstract (EN)We address the problem of a social planner who, as in Weitzman (2001), gathers data on discount rates and wants to infer the socially efficient consumption discount rate. We propose an equilibrium approach and we analyse the expression and the properties of the resulting equilibrium discount rate. We provide equilibrium foundations for Gamma discounting at the collective level even though individual agents are classical exponential discounters. We analyse the impact of shifts in the distributions of individual discount rates on the shape of the yield curve. Finally, we apply our approach to Weitzman (2001)'s data to propose discount rates for public sector Cost-Bene t Analysis, in particular for the long term.
Subjects / KeywordsConsumption discount rate; equilibrium discount rate; experts discount rate; hyperbolic discounting; cost-benefit analysis; gamma discounting; divergence of opinion
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