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Published in:
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2021 | OriginalPaper | Chapter

8. Choice over Time

Author : Takashi Hayashi

Published in: Microeconomic Theory for the Social Sciences

Publisher: Springer Singapore

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Abstract

Let me repeat that even if goods are materially the same they are treated as different goods when they are to be consumed at different time periods. Here saving is understood as selling current consumption and buying future consumption, and borrowing is understood as buying current consumption and selling future consumption.

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previous chapter Willingness to Pay and Consumer Surplus
next chapter Choice Under Risk
Footnotes
1
Practically, there may be may people who are “stupid,” or even when they recognize the arbitrage opportunity they may not be able to exploit it because of barriers such as transaction fees. If that is the case arbitrage opportunities may not disappear.
 
2
This may leave a problem of “reoptimization” in Period 2 about which good to consume more or less, but we are rather focusing on intertemporal trade-offs between consumption levels at different periods.
 
3
Here “basically” suggests that an additional assumption is needed. It is about the property that the stationary discounted utility form is written the form of summation, but I omit this since it is technically very hard. See Koopmans [2] if interested.
 
Literature
1.
Camerer, Colin. “Individual decision making.” Handbook of Experimental Economics (1995).
2.
Koopmans, Tjalling C. “Stationary ordinal utility and impatience.” Econometrica (1960): 287-309.
Metadata
Title
Choice over Time
Author
Takashi Hayashi
Copyright Year
2021
Publisher
Springer Singapore
Book
Microeconomic Theory for the Social Sciences

Print ISBN: 978-981-16-3540-3

Electronic ISBN: 978-981-16-3541-0

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-981-16-3541-0_8

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