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Exotic Preferences for Macroeconomists

Authors: Backus, David
Routledge, Bryan
Zin, Stanley
Keywords: time preference;risk;uncertainty;ambiguity;robust control;temptation;dynamic consistency;hyperbolic discounting;precautionary saving;equity premium;risk sharing
Issue Date: 13-Sep-2004
Series/Report no.: EC-04-20
Abstract: We provide a user’s guide to “exotic” preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk sensitive and robust control, “hyperbolic” discounting, and preferences over sets (“temptations”). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allocations.
Appears in Collections:Economics Working Papers

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